I now want to deal with the amendment of the hon. member for George (Mr. Werth), and in the first instance I want to say that I can understand, of course, that the Minister is not in a position at this stage to submit to the House and to the country a completely revised system of taxation. He has apparently done nothing or very little to submit to the country a comprehensive scheme. It still remains to be seen whether he and the Party to which he belongs are able to submit such a comprehensive scheme. Personally I am inclined to think, bearing in mind the various conflicting interests in the Party, that it is hardly possible for him as Minister of Finance on that side of the House to submit such a comprehensive scheme. But in any event, whether, or not he can do it ultimately, at this stage he is certainly not in a position to do so. I got up at this stage in order to point out that even if he cannot submit a new system of taxation, there are certain respects in which he can revise the existing system, that there is a certain amount of relief which he can give in respect of certain factors in the system of taxation which retard production. I do not want to suggest that he is in a position to eliminate all the production-retarding factors in the system of taxation entirely at the moment, but I want to make certain proposals as to the direction in which he can bring about what one might term a tentative revision in the system of taxation, so as to eliminate the worst features of the existing system. The Minister is inclined partly to concede that the existing taxation system is a system which retards the whole production in this country, but he says that it is exaggerated tremendously, and the trump card which he always plays triumphantly is this: “Look at the figures as to the number of companies which have been registered and the new capital that that represents.” I want to tell the Minister that that is not a trump card at all. Every available figure which can be used as a test as to whether or not an increase of production and an increase of our national income are retarded by the system of taxation, confirms the opposite of what the Minister alleges, and when one speaks to industrialists throughout the country, one finds that they, too, say that what the Minister maintains is not correct. I want to mention a few of these figures. In the first place, I have pointed out on a previous occasion that our net investments in South Africa, representing investments in new undertakings this year, or in the latest year in respect of which figures are available, namely 1943-44, are only 50 per cent. below the pre-war level. The net investments représent only 50 per cent. of the pre-war level. Take the other figure, the figure in respect of the national income derived from our industries. There we find that in 1941-42 the contribution of industry towards the national income was £98.2 million; the next year it was £100,000,000, and in the latest year, 1943-’44, it was also £100,000,000 only. We notice that in the last three years the income derived from industry has remained almost static; it has not risen. There was a slight increase in the first of these three years, but the following year there was no increase. I now want to deal with the third figure which can be taken as a test, namely the taxable income, the normal taxable income derived from industries in comparison with other sources. The taxable income derived from industries in respect of the year 1939-’40, i.e. the last pre-war year, was approximately £16,500,000. In the latest year in respect of which we have figures, figures which are given in the latest publication of the Commissioner of Inland Revenue, the amount dropped to £13,300,000, in other words, there is a decline of £3,200,000. I know the Minister will say that to that must be added the figures in respect of the excess profits duty as well as the figures in respect of the trades profit special levy. That is so; those figures must be added. Unfortunately the figures in respect of the amount derived from industries by way of excess profits duty, are not available, nor the amount derived from the trades profits special levy. One cannot therefore give these figures quite correctly. But I do want to say that if one draws a comparison between industry and trade, for example—the excess profits duty and the trades profits special levy are also payable in respect of trade—one gets a comparison which gives one a fairly good comparative picture of the position. Here are the figures with reference to trade. In the last pre-war year, i.e. 1939 to 1940, the taxable income was £16,500,000, the same as the figure with reference to industries, but in 1943-44 the taxable income derived from trade rose to £20,800,000. There is an increase, therefore, with regard to trade in the same period of £4,400,000, while in the corresponding period, with regard to industries, there was a decrease of £3,200,000 in the taxable income. If one adds another branch of the trade, the liquor trade, one finds that there was also an increase in the taxable income in this period as far as the liquor trade was concerned, an increase of a little more than £3,000,000 to £3,750,000. It is a fact, therefore, that in the ordinary trade, in spite of the fact that one cannot calculate what the excess profits duty and the trades profits special levy were, there was a considerable increase in the taxable income, if one does not take into account trade profits and excess profits. But as far as industry was concerned, there was a considerable decrease. That proves that the taxation system of the Minister has a retarding influence on industrial expansion in our country. We still say at this stagé that even if it is not possible for the Minister to come forward with a completely new system, he ought in any event, to afford a certain amount of relief in the trying system we have today. We have now reached a period in our history when it is imperative to increase production as much as possible, but the Minister continues from year to year to maintain a system which, in fact, is calculated to restrict production. In what way can the Minister offord relief? I do not want to suggest any drastic alterations, but I want to make a few suggestions as to how he can rid the excess profits duty more particularly of the characteristics which retard the expansion of industry. In the first place he can do so by increasing the standards. Certain standards have been laid down for individuals and certain standards for companies, in those cases where they had no pre-war standards. Then, of course, there are also the pre-war standards. My suggestion is that the standards, including the pre-war standards, should be increased. Where any individual or company had a pre-war standard of a certain amount, it is high time to increase it now. There has been no increase in the standards up to the present. The standard of individuals who had no pre-war standard, should also be increased. That is one way in which he can bring about a change, by means of increasing the standards. I just want to point out in passing that that is one of the methods in which Sir John Anderson afforded a certain measure of relief in England last year already.

Last year for the first time.

Very well, last year for the first time, but he afforded this relief and consequently sacrificed £10,000,000.

But up to that time he was taking 100 per cent.

No, 25 per cent. of 100 per cent. was set aside as a nest egg to be refunded to the people after the wär. The 20 per cent. was nothing but compulsory saving.

Only in certain cases.

I am afraid the hon. member has not carefully read the speech which Sir John Anderson made last year. If he had done so, he would have seen that 5s. in the £ was held back for repayment after the war.

4s. in the £, 20 per cent.

Very well, let it be 20 per cent., but it was held back for repayment to industries after the war when they will need the money for expansion. The hon. member will admit that at any rate, and that is all I am asking. Apart from that, Sir John Anderson made a concession of £10,000,000. Now I want to mention another method in which some relief can be granted. We are prepared to make proposals; we are not afraid to suggest proposals. We hope that the Minister will give effect to these suggestions in the interests of the country and of industry. The Minister is welcome to the credit if he applies these proposals, but we feel that it is our duty to make these proposals in the interests of the country. There is another method in which he can do it, namely, by way of a rebate of a portion of the excess profits duty for approved purposes, as for example the building up of reserves. The Minister might say: “I am taking 15s. in the £, but I am prepared to allow a portion of that, say 5s. in the £ as a rebate, provided I have the assurance that it will be used for approved purposes, such as the building up of reserves, for example, which I know you will require urgently after the war and when the depression comes”. That is the second method, and I now come to a third method in which he can grant tentative relief, and that is to regard a portion of the tax as compulsory savings, repayable after the war. That is the principle which was applied in England. It does not matter whether it is 25 per cent. or 20 per cent., but that is the principle. The 20 per cent. is held back to be refunded at some future date when the people require it for expansion. Let the Minister adopt the same course in this country. He can take the full amount which he is taking now, but in that case he should regard 20 per cent. of the excess profits duty as compulsory savings and keep it for the people until after the war so that they will have this money available for the purchase of new machinery and the expansion of industry. That is the third method I want to suggest. The people will then be able to use this money at a time when they will require it most urgently for industrial expansion. Another small point—may I just mention it—which can remove a great difficulty, is the application by the Minister of the simple principle that when two industries amalgamate for the sake of rationalisation, and each industry has a pre-war standard, the Minister ought to give the new amalgamated industry the joint standard of the two old companies. At the moment the position is, as Dr. van der Bijl also indicated, that when companies amalgamate, the new company cannot have its pre-war standard recognised, and the company is limited to a percentage. This is a small point, but it is a method which can also be used to afford a certain amount of relief, and it is, in fact, intended to encourage the rationalisation of industries. But the Minister stubbornly refuses to make even this small, trifling concession which will be useful to the industries of South Africa. Another method in which he can grant relief, is by putting the basis of calculation on a sliding scale. Instead of saying that 15s. in the £ will be payable on everything in excess of 8 per cent., he can and ought to place it on a sliding scale, and he should provide that between 8 per cent. and 10 per cent., the tax will be 10s. in the £, between 10 per cent. and 12 per cent., say, 12s. in the £, between 12 per cent. and 14 per cent., say, 14s. in the £ and that everything in excess of 14 per cent. will be subject to the full 15s. in the £. In that case the tax will increase gradually instead of being 15s. in the £ in respect of everything above 8 per cent. I mention those figures as a possible basis, if we accept the basis of 8 per cent., and I feel that it is not reasonable that the full amount should be payable on everything exceeding 8 per cent. Let the Minister take more as the profit increases. In that case people who make just over 8 per cent. will not have to pay the full 15s. The idea is to get a more graduated basis. There is another method in which the Minister can make a concession, and that is by means of direct repayment by way of a rebate. I do not favour that very much. I am more in favour of the first suggestion I made, namely to grant a rebate of 20 per cent., repayable at some future date. I am more in favour of that procedure than that the Minister should take the full amount of £100 if the individual has to pay £100 and then hold back £20 in the form of compulsory savings, which will then be repayable to the person after the war when he will need it. These are a few suggestions which might be adopted in order to grant immediate relief and to afford some measure of encouragement in the new year in respect of industrial expansion. I do not think that is sufficient, but while the taxes remain and the Minister feels that it is necessary to impose them, I think that relief should be granted. These are the minimum requirements that we can put. It is the minimum we expect of the Minister at this stage. Let me explain why I say that. In the first place it must be borne in mind that in taking the pre-war standard as the basis of an individual or a company—we are now in the sixth year of the war—no allowance is being made for natural expansion. Surely one can expect that if there had been no war there would have been a natural expansion in the income of the individual or the company. But no allowance is being made for that. Take the case of a professional person. Let us assume that his pre-war standard was £1,500. If the war had not broken out, one would have expected that this individual’s income would not have remained static over a preiod of six years, that his income would not have remained on the £1,500 notch; there would have been a natural expansion; his income would have risen even if there had been no war. In our country we maintain the fiction that excess profits duty is a tax on war profits. That is not the case. But let us bear in mind, in any event, that war or no war, there would have been an expansion.

How can you differentiate?

One cannot differentiate altogether accurately; I admit that, but let us in any event start on the reasonable assumption that a young man who earned £1,500 in his profession in 1939 will no longer be on £1,500 today, even if there had been no war. Surely it is reasonable to assume that there would have been an expansion, and it is not fair therefore to apply the pre-war standard of six years ago and not to take into account any expansion. I do not think that is fair towards these individuals, nor is it fair towards the companies. That is one reason. Six years have elapsed since we laid down this standard and one would have expected an increase in the normal course of events in the income of these persons or companies in the course of six years. The old basis might still have been justified in respect of the first two or three years of the war but thereafter there was certainly no justification for applying the pre-war standard of 1939. It is not fair because the fact that the income would have risen in any event, war or no war, is not taken into account. In the second place the rise in the cost of living since that time is not taken into account. The pre-war standard may have been sufficient at that time, but it is no longer sufficient today, because in the meantime our cost of living has increased by 31 per cent. It would be reasonable to say that this standard should automatically have been increased every year in order to keep pace with the increase in the cost of living. That would have been reasonable, because in that case the actual value of the sum allowed as the pre-war standard would have remained constant. But what is the present position of a man who has been allowed a standard of £1,500? The value is no longer £1,500; it has dropped continually and the cost of living has increased by 31 per cent. Today that £1,500 is no longer worth £1,500, but less than £1,200.

Would you apply that to businesses as well.

In the first place I am stating the reasons generally. In some cases those reasons are applicable to individuals with greater force than in other cases but I think in the case of businesses, too, one could apply that principle, because there has been an increase in their expenditure owing to the fact that they have to pay higher wages and cost of living allowances.

Of course, that reduces their profits.

That is correct. The profits are consequently reduced. This argument is perhaps more applicable in the case of individuals, but the first argument is also applicable to businesses, because we must assume that the profits Of a business concern, which is not a bad one, would have increased in the course of its development since the outbreak of the war. A new business, which had only just started in 1939, may have shown a profit of 4 per cent. If it became a flourishing business, the profits would naturally have increased. Why should such a business now be pegged at 8 per cent. while old-established businesses in 1939 made a much higher profit, and may, in fact, be showing a profit today of 12 per cent., 20 per cent. or 40 per cent., a profit which is exempt from excess profits duty, while they only pay the lesser tax on trades profits? I advance this argument to show that we are entitled at this stage to insist on a change being brought about in the excess profits duty. The excess profits duty is not only a question of obtaining money for the Treasury. The State obtain that money with a conditional obligation to repay it in the event of losses which may be suffered in subsequent years. I should like to have a clear statement from the Minister as to how long he proposes to apply that conditional provision after the peace. If he leaves it for a period of ten years, the majority of business will be able to get a refund during the depression years of the amount they paid in, but if he is only going to allow it for a year or two, they will probably get back nothing of the amount they paid in, or very little, at any rate. I should like the Minister to give us this reply. I think on a previous occasion he said something in that connection, and I believe he fixed the period at two years.

No. I did not.

I am not sure on this point, and I should like the Minister to tell us for what period he proposes to continue with this tax, subject to these conditions, after the peace, and in what form; whether the position will be that it will be limited to refunds or whether further taxes will have to be paid. I think industry and the country in general are entitled to that information. The point I want to make is that if the State assumes this conditional obligation with reference to the excess profits duty, that obligation will become smaller and smaller as the years pass, because the period during which the tax is payable becomes longer and longer. If the Minister is only going to make refunds in respect of losses for two years after the war, it will be seen that he has this obligation in respect of the losses of two years only, as against the profits which were paid in over a period of six years. If this tax continues for a period of seven years before peace is declared, after which refunds will be made for two years, it will mean two years as against seven years. The ratio of the obligations assumed by the State as against its income decreases with the passing of the years. At the end of the first year there will be an obligation to make refunds in respect of two years as against the payment of taxes for one year; at the end of the second year there will be an obligation to make a refund in respect of two years as against two years of payment, and as the years pass the ratio becomes more favourable for the Treasury. Let us assume that peace is declared after the tax has been paid for six years, then it means that the Treasury will have the profits of six years in order to cover the losses of two years. The ratio of the possible obligation of the State towards the people who pay excess profits duty decreases with every year of the war, and that is a further reason why it is imperative that some measure of relief should be granted at this stage because the possible risk which is run hy the Treasury is constantly decreasing. They can do it much more easily today than they may have been able to do it a few years ago. A further point is this. There is another reason why we are justified in asking for relief at this stage, namely, that during the past few weeks the war has taken a course which may have escaped the attention of the Minister of Finance when he drew up his Budget. I notice that Sir John Anderson, when he introduced his Budget in the British House of Commons last week, made provision for a reduction of 10 per cent. on the total Budget—not only on the War Budget. I am convinced that if he had drawn up that Budget two months ago, he would not have made provision for a reduction of 10 per cent. Our Minister of Finance drew up the estimates of expenditure for the new year two months ago, arid I want to say that if he were to draw up the estimates today, he would not regard the position in the same light as he regarded it at that time, as far as expenditure is concerned. If he were to draw up the estimates today, there is the possibility in view of the new trend which the war has taken, that there would be a reduction of expenditure. I say therefore that in view of the new trend of the war, he over-estimated the expenditure, and any relief which the Minister of Finance can grant at this stage, which will mean a reduction of income, will probably be more than compensated for by the decreased expenditure as a result of the present war position. I think we are entitled therefore to say that since the estimates were framed two months ago, certain savings should now be effected. There is another reason why we feel that it may be a good thing, as far as the excess profits duty is concerned, to grant some relief at this stage, and that is because the excess profits duty was introduced a year or perhaps two years, before the special levy on trades profits. It was in operation a year or two before the trades profits special levy came into operation and there is some justification therefore for adjusting the position more or Jess at this stage. That means that in relation to these two taxes some relief should be given as far as the excess profits duty is concerned. I say there is sufficient justification for asking for relief at this stage as far as the excess profits duty is concerned. I can give the Minister of Finance the assurance that apart from these arguments which I have addressed to him, and apart from the good reasons which I have advanced to justify a change, it will pay him amply to grant this relief, because if this tax is decreased it will result in increased production. I think the industrialists in this country will give the Minister the assurance that increased production will more thaan compensate him for any concession he makes in regard to these production-retarding characteristics of his taxes. Of course, that is not the only relief for which we are asking. I have dealt more particularly with the excess profits duty, but there are other taxes as well. I have in mind the special war levy on transfer dues, for example, from which approximately £1,000,000 is expected. That is also a tax in respect of which some relief can be granted for the same reasons I mentioned in connection with the other taxes. The war position has changed. This levy on transfer dues was a war levy. Why should it continue to be applied? Apart from this levy on transfer dues, there is also the amendment which the Minister made last year in respect of the reduction allowed to a farmer in connection with improvements on his farm. That is a measure which was introduced last year—the amount which the farmer is allowed to deduct was limited—and as in the case of the excess profits duty, this is something which has a retarding influence on agricultural production. Just as the excess profits duty has a retarding influence on industrial production, so this provision has a retarding influence on agricultural production, and it is just as important and more important to have increased production in our primary industry than it is to have increased production in our secondary industries. For that reason I want to ask that that arrangement of last year should be altered and that the position be restored to the pre-1944 basis. As far as the personal savings levy is concerned, we do not want the additional amount of £180,000 to come from an increased tax on persons, quite apart from the savings levy which is abandoned, because it will hit the poorest section of the population hardest, that class which is least able to contribute. If the Minister wants to abandon the savings levy portion, we are grateful for it. But if he grants relief with the one hand, he should not with the other hand impose burdens which nullify that relief. Whereas the majority of people have in the past been able to get a refund of a portion of the tax, we now find that the tax is levied in such a way that the greatest portion they are now paying cannot be refunded. [Time limit extended.] I am grateful for this concession, and I shall not detain the House much longer. Then there is another tax which, in our opinion, should no longer be levied, and that is the tax on railway passengers. This is an undesirable tax in view of the constitution and on many other grounds, and we feel that if there is any opportunity at all to do so that tax should be abolished. At the moment it yields between £600,000 and £700,000, and we know that even the railways do not like taxes of this nature. What is more, since this tax has been levied by the Minister of Finance, the railways have also increased the tariffs by 10 per cent. One feels that this type of tax one does not like to have on the Statute Book, and the sooner it is removed from the Statute Book, the better it will be. This is a tax which is open to attack on many other grounds, apart from economic grounds, and for that reason we ask that this tax should also be abolished. Apart from the excess profits duty in respect of which we also want relief, the taxes which we now suggest should be abandoned represent an amount of something less than £2,000,000 in the Minister’s estimates. The relief which ought to be given in the excess profits duty—I take it on the basis of a relief of 20 per cent.—will mean that the Minister will have to abandon an income of approximately £3.000,000. This means therefore about £5,000,000 in all, in revenue, and the Minister will naturally ask how we propose to cover this amount. My reply in the first place is that in each of the past two years the Minister’s estimate of the excess profits duty has been £2,500,000 less than it actually produced. He has in each of these two years underestimated the yield by £2,500,000. If we make our calculations on the same basis we may expect that in respect of this year as well he will also under-estimate the yield from excess profits duty to that extent. It is a point that we may take into consideration. In other words, the amount of the concessions will not be £5,000,000 but on the basis of this estimate it will probably be only £2,500.000. The next reason I would like to mention is that economies may be expected on war expenditure bearing in mind the fact that the war is now approaching its end, a fact which was not taken into account in February when the estimates were prepared. These are all provisional things that I have outlined here as requiring to be done. Then there is another problem on which I should like to say a few words, although I must do it very briefly in order not to detain the House too long. It affects the more permanent changes in our taxation structure in the future. There are certain requisites for that. The first consideration that one may mention is that of a holistic view of our national economy, a co-ordination of our national economy. Our economic interests are apportioned between various Ministers of State and are looked after in a way by these various Ministers, which results in these interests clashing with one another. There is no harmonisation of our economic policy. I may mention one or two illustrations. In the first place, we have the Minister of Mines who of late has blossomed out as the representative of the interests of the mineowners. He is in the House as an individual who considers that his post of Minister of Mines implies that he should foster the interests of that one industry along lines desired by the mine-owners, apart from the economic interests of the country as a whole. That is an erroneous conception, but under the system that prevails it is perfectly natural that such a thing should happen. The Minister has become a champion in this House of the policy of extracting the gold as rapidly as possible and leaving holes in the ground— get the gold out as quickly as you can, and when the gold has been taken out the open holes can remain there. He believes that is in the interests of the country as a whole, just as the mineowners believe it is in the interests of the country. We cannot tolerate the mine-owners having to judge the interests of the country. It may be that it is in the interests of the country, but we cannot leave it to the judgment of the mine-owners, who have a direct interest in making the greatest possible profit in the shortest possible time. Let us have a body and a policy that can determine what is in our interests so that we shall not be dependent on the judgment of interested persons. We have a Minister of Economic Development who deals with commerce and industry. He often uses euphonious words in the House in regard to the protection and the promotion of industries and similar things; but we have with him in the Cabinet the Minister of Finance who is working in the opposite direction to that indicated by the Minister of Eoconomic Development. He is obstructing development and retarding it because he is introducing measures that hamper production. He comes along with taxes such as I discussed here this morning. Then we turn to the Minister of Agriculture. Apparently he says—when he does say anything—that agricultural production should be increased. But alongside him in the Cabinet is the Minister of Finance, who states that improvements calculated to augment agricultural production cannot be included in the deductions for income tax purposes as in the past, except to the extent of 30 per cent. of the gross income for the year. If such clashes are possible we are bound to feel that there is no unified policy. Then we have the Minister of Transport. He realises the important factor economic transport is in the development of agriculture and industry. He desires to do the best for the country in so far as regards the railways. On the other hand, it is in his interests to make profits, and we know that he makes big profits. Where is the unity of policy, the co-ordination of our economic policy that can take all these conflicting interests as to how they should be met for the benefit of the national economy as a whole. There are other factors bearing on our economic position, and what development or what means are in existence, or what efforts are being directed to the co-ordination of these factors? For example, there is the question of labour; how is that fitted into our economic policy as a whole? Then there is the poor consumer. We have no Minister of Consumers. The consumer must be satisfied with the crumbs that fall from the Minister’s tables. And now they are handed over to the tender mercies of the controllers, as an hon. member reminds me. We maintain that there is only one course and only one way out, and that is the creation of a central economic council, which is not bound to one or other aspect of the national economy so that it will not give advice from the viewpoint of one or other of the interested parties. We should have an independent body conversant with affairs so that it may be able to give advice. When I refer to a central economic council I do not mean the caricature of such a council existing today in the shape of the Planning Council. The Planning Council is a body so circumscribed in its powers and so constituted that one can have no confidence in it, if one accepts a few of the members. The best brains of the country should be available for a central economic council in order to evolve an economic policy that would aim at reconciling the conflicting interests of the various elements and economic groups, and which would lay down a policy for the country as a whole bearing in mind the unity of the economic structure of the country. Such a policy is the first pre-requisite for a clear and permanent taxation structure. Another matter that demands investigation is the effect of direct and indirect taxes on the various income groups so that we may decide whether there is an equitable pressuré on all these elements in respect of the taxes. This is highly necessary having regard to a permanent system of taxation. Then there is another matter, namely, that the taxes should be regarded in their true perspective against the economic background of the country. Taxation is not there only as a means of collecting money for the Treasury, but it is an instrument for rightly shaping development of the country through the medium of revenue and expenditure and in placing the national economy on a sound basis. Before we can proceed to the institution of a permanent taxation system in our country we must have before us that picture of the background against which we should regard our taxes. I doubt whether the Minister of Finance is in a position to do that, or whether the party on the other side are in that position when one looks at their composition and at the various economic doctrines that are found there, when one considers their labour policy, their industrial policy, their agricultural policy and so forth. I have said that we should keep before us a fixed picture of the economic background of the country, and of the objective towards which we are striving, but if we look at the other side of the House we see there only planlessness, political bankruptcy and that political sterility that makes it simply impossible for them to establish anything of a constructive character, and we say for our part that we have now reached a time in the history of South Africa when there is too much at stake for our country and for our economic future to allow the country to run the risk any longer that it is running today with a decayed and a decrepit Government that is powerless to function constructively, and unwilling to die decently.

I am sure the Minister of Finance must have listened to this debate this year with a great deal of satisfaction. In the first place the hon. member for George (Mr. Werth) at last admitted that war expenditure was necessary and that the overwhelming majority of the people of South Africa were in favour of that war expenditure. Well, Mr. Speaker ….

We are moving.

…. the hon. member has travelled far. All the same I congratulate the hon. member for George on having had the courage to get up in this House and say what he said yesterday. When it comes to the examination of the taxes of course he cannot say very much about them at all, because there are no new taxes. That is his trouble, and he passes over them in silence.

We shall have an opportunity for that.

One of the functions of an Opposition is to attack the Government on any new expenditure that is embarked upon. In this Budget actually the Minister of Finance lias embarked upon a very considerable new expenditure. He has increased his Votes under several heads by very considerable sums, and to finance these extra expenditures the Minister of Finance has such a buoyant Budget that he is financing them from buoyancy. My hon. friend smiles, but there is the fact, you are budgeting for an increased expenditure, and you do not have extra taxation to cover that increased expenditure because your revenue is so buoyant.

That is an inflationary buoyancy.

Well, I am placed in a very difficult position in replying to the hon. member for Fauresmith (Dr. Dönges). He got up and spoke for 40 minutes, and then he secured an extension of time. I am a mere member of the Government party, asked to say what I have to in twenty minutes.

Have you not been asked to say nothing at all after what you said last time?

We all know “Polly’s pretty little ways”, and the hon. member for Humansdorp (Mr. Sauer) does not disturb me by a remark of that sort. I even detect an improvement in him in his attitude towards war expenditure, and I may humbly claim perhaps I had some little influence upon him in that direction.

We will give you an extension.

The hon. member for Fauresmith gets up here and he puts on the prophet’s mantle. I think any man who has put on the prophet’s mantle during this war period be it Mussolini or anyone else, has been disappointed by events. As a matter of fact in these times no sensible man will ever don the prophet’s mantle. The hon. member, for example, argues about the standstill in industry at the present moment, and he puts all that down to taxation. I think I can anticipate the Minister of Finance here, because I am sure he can answer the hon. member with the answer I shall give him, and that is there are far more considerations than taxation for bringing in a standstill order on industry in South Africa at the present moment. If my hon. friend was really a practical man he would find you have today such a thing as buildings you cannot get on with, machinery you cannot get hold of, raw materials which—despite the favourable position of the war today—are getting scarcer and scarcer.

What has that to do with taxation?

It has to do with the hon. member for Fauresmith who is trying to say that the taxation of the Minister is responsible for that stop in the development of industry. His story is only half a story; I am giving the other half. Take the hon. member for George, how he spoke about the diminution of the gold output of this country. It is a very remarkable thing that we here in South Africa have kept up our gold production better than any other country in the world. There has been a fall in the world’s output of gold almost since the commencement of the war; in 1940 it was 1,290,000,000 dollars in 1941 it went down to 1,280,000,000 dollars, and in 1943 it dropped to 950,000,000 dollars. Our total gold production reduction over that period was only something like 10 per cent. So you see what is happening with our gold industry here in South Africa is something that is happening on a much vaster scale with the gold industry right through the world, and to make prophecies about that is a dangerous thing.

Every budget is a prophecy.

I disagree with that. Every budget is an intelligent forecast. I will add this, the Minister of Finance has been remarkably intelligent in his forecasts.

He has been only £2½ millions out on the revenue from excess profits.

By and large his budgeting has all been remarkably accurate That is the sort of loose talk that has to be deprecated, because in the amendment proposed by the Opposition they are only voicing an opinion that is pretty general throughout the country today, and the first man to admit that is the Minister of Finance himself. The most authoritative opinion the hon. member for George quoted on the need for this amendment was that of the Minister of Finance himself.

We do not want words but deeds.

The words were of sufficient importance for you to quote them, the Minister’s own words.

We must quote his own bible.

The consensus of opinion, including that of the Minister of Finance, is that we should have an amendment in our taxation. The only question is—when? When should that amendment be brought about? I want to say one or two things about that at this stage. I can quite well imagine the Minister of Finance, after having listened to the hon. member for Fauresmith, saying: This amended legislation the Opposition needs is going to entail a very large reduction of my income. This must reduce taxation. I want to keep that clear. In this country today there are many responsible people who realise the Minister of Finance must have a certain amount of money and, when they recommend an amendment in our taxation they first of all say: We agree to give you whatever money you want; if you want £100,000,000 or £120,000,000 we realise it is a sine qua non you must have that money. Yet we want the taxation machine altered because we say that in the getting of that money, taxing to get that money, he is not taxing equitably or evenly. Take for example the matter of the anomalies of these small incomes my hon. friend raised, and raised quite rightly. I think the Minister will admit that they disclose a state of affairs which is sometimes unbelievable and the reaction of the Minister to this is: Well, I must have the money. And in many cases, if not in all cases, these people at least are in a better position than they were before the war, and so during the war period I will do nothing about it. I can understand the Minister’s point of view. In the higher income groups also you often find anomalies. A couple of years ago the member for Houghton (Mr. Bell) raised the example, which is exceptional, of an income of £15,001, where the man is left with £7,213, and all the rest went quoted in taxation, but a man with an income of £26,001, nearly double the income, found he was left with £7,106. The Minister can say that a man with such a high income can afford to pay that large amount of money, but we say that it is not fair or equitable, and what I want to try to impress upon the Minister is this, that what responsible opinion in commercial circles and industrial circles wishes and desires, is a machine which will give him first of all the same amount of taxes he gets today. The idea of altering the machine is not to reduce the globular taxation at all. Fundamentally we want this amendment in the taxing machine, and to leave him with the globular sum that he is getting today. We argue on that basis. The machine can be built so that it gives him the same amount of taxes. I say that because, as I have already said, when the Minister hears that this new taxation machine is a machine which will give him less money than he has today, he will be very hesitant about it and wonder to himself why he should have a machine which will give him less than he has today. Because that is the point: this House is always asking for more and more money and the only man who can give this House that money is the Minister of Finance. How can you ask for more money and get more money and give him less money and propose to allow him to get less money? That is the whole position. I want to impress this upon the Minister, that all we want is this altered machine to give him the globular sum of money he wants. First of all he must get that. After that we will consider whether or not he can reduce taxation or needs more taxation, but he must have that extra taxation by means of this new machinery scientifically adjusted, and if he needs less it must also be scientifically adjusted. There is no adjustment approaching any scientific formula today in our taxation. He has been handed an old legacy and he had added bits and pieces to it until today it is a very unwieldy machine. The position today is that you can go to any commercial man or industrialist but you will not find one who can tell you what his taxes are.

Can you tell that in any country?

Oh yes.

I have a business friend in England who visited me a few months ago, and he spoke to me about their taxes. He said to me that at the end of the year he can take paper and pencil and sit down and work out what his taxes are. But what is the position here? I can tell you this from personal experience. You can get your accountants to work out your taxes and they will find that they are X. The auditors come along and say they are X plus Y, and they all agree then that it is X plus Y, but if you go to the Inland Revenue Department as often as not they say X plus Y is quite wrong, and that it is X plus Y plus something else. I am coming down to this that while I have a great deal of sympathy with the amendment of the Opposition, it is absurd to expect the Minister to accept it. How can he possibly accept it? If the Opposition in this House used the means at their disposal in the best possible way they would be able to accomplish much more than they do. They have put a perfectly good scheme to the Minister, but they hold a pistol to his head and say that unless he does what they say they will not vote in this Committee for his Ways and Means.

Why not?

I would like a new approach to this matter altogether. Members opposite and members here have given a good deal of thought to this matter. Many people outside Parliament have thought about it, and I can assure the Minister that even in the Opposition benches there are many members who will say that the amount of money he wants must be given to him, but it must be done by a machine which taxes equitably and justly and simply.

And so that it does not retard production.

I am coming to that. Why do we insist upon this? If an hon. member gets up in this House and talks as I am talking today, the idea generally is that we want to save money. As a matter of fact when I spoke to the Minister some time ago he thought I wanted the rich to be taxed less, so that the poor could be taxed more. I resent that idea. There is no such idea in my mind. The people who can pay are the people who should pay, and I am the last man who would lay an extra penny on the poor, especially if the rich pay less. I think in many respects this House takes the wrong view of things altogether. We first of all say that we want this and that and the other thing. We should first of all ask whether we can afford this or that or the other thing. In this House, according to hon. members on all sides of the House, there is nothing South Africa cannot afford. The best is good enough for them. They say they will put legislation through quickly, but who is to pay? Always the other fellow. I want to impress this point upon the Minister. The hon. member for Fauresmith (Dr. Dönges) has quoted the British Chancellor of the Exchequer. It is a remarkable thing that even in the King’s speech from the Throne he said that his Government was charged with putting the economic house of the Kingdom in order, or words to that effect, and that everything shall be done by the Government to help to increase supplies and commodities for civilian use, and also to help to increase the export trade of the country. Another very significant speech was that of Lord Woolton when he said that the people in England industrially have moved forward a generation, their aptitude and their adaptability has been wonderful and it will be the policy of the Government to see that the jump forward of a generation is cashed in on in greater production, better production, both of home goods and of export goods. Have we ever had a statement like that made by our Ministers? Have they ever given a little encouragement to these men, thousands of them, who learnt new jobs and who are worried today about what will happen to them after the war? He worries about whether it will be any use to him that he has learnt a new job, whether it will be an asset or a liability. And the one Minister of all Ministers who can help and encourage these men is the Minister of Finance by stating his financial policy, helping by taxation and seeing that encouragement is given to enterprise, and that the taxation will be used to help and encourage people instead of, as it is today, being the very opposite.

Would you mind sitting on this side for a change?

No, there is only one party in this House which would permit me to make speeches like this and not have me kicked out. That is the position. In all seriousness I want to try to impress upon the Minister of Finance his huge responsibilities. There are other Ministries and other Ministers, but I say without fear of contradiction that the man and the Minister who has more responsibility for whether or not we will pass into an ideal state, shall we say, in our industry and activities after the war, a state where we will have no repetition of what we had at the end of the last war, is the Minister of Finance. And I would ask the Minister with all the earnestness at my command to tell this House and the country definitely that it is his policy, that it is the Government’s policy to see to it that at the earliest moment he will change his whole taxation machine and will encourage enterprise, that he will give hope to the many people today who have no hope and will give this country that feeling of confidence which it has not got today, and that by having this new kind of machine he will be cashing in on the fight we have put up for the freedom of South Africa and for the happier South Africa that the majority of our people today believe we were fighting for in this war.

I wish to take advantage of this motion to ask the Minister of Finance whether he will not make a statement in regard to the taxation proposals affecting the protection of our secondary industries. Now, Sir, if I understood the hon. member for George (Mr. Werth) correctly, I think he indicated yesterday that his side of the House would be prepared to support the Government in any measures that would encourage industry in the Union. We know that the future welfare of any country depends on the full use of all its national resources, and I think it will be generally agreed that for South Africa, perhaps more than for most countries, it is imperative that our national resources and our human material should be fully developed and effectively used. As one of the representatives in this House for Port Elizabeth, which is one of the pioneering and most progressive centres of secondary industry, I need make no apology for submitting this plea to the Government for a continuance of the policy of protection which it has inaugurated, and in some measure for the improvement of that policy on sound economic lines. It is today generally accepted that it is in the national interest that secondary industry in the Union should be actively encouraged and fostered to contribute an increasing share to the national dividend. Already its importance can be measured by the fact that at present manufacturing industry is responsible for no less than approximately one-fifth of the Union’s social dividend. At the same time it is conceded that this is only the beginning of things and that in the new order of things new demands will be made on secondary industry to such an extent that its contribution to our national income will have to be at least trebled if not quadrupled. In making this plea I wish it to be quite clearly understood and to emphasise that it is not desired that protection should be granted on an indiscriminate basis, solely for the sake of protection. The way I view it, is that the whole framework of protection should be on sound scientific foundations and should take into account certain fundamental factors in our national economy. In this respect I think special attention should be paid to the interests of agriculture and mining, the production costs of which should be kept as low as possible, to the interest of consumers, and last but not least to the scope of employment of all forms of labour and the maintenance of satisfactory conditions. Now, the Customs Tariff Commission of 1934-35 established the fact that a great deal of the industrial development that took place after 1925 and of the employment resulting therefrom were directly due to the stimulus given by the protective policy which was inaugurated in that year. That being so I think it may be taken for granted that the future stimulation of industrial development in the Union will be directly dependent on the assurances and pledges that the Government can give that it will continue to encourage the development of manufacturing industry in the Union hy means of the Customs Tariff. There can be no doubt that industrialists are today rather concerned and that they look to the Government to implement the assurance given by the Minister of Economic Affairs in October last, which was subsequently repeated by him in Another Place, that that is indeed the policy of the Government. Confidence as far as the industrialists are concerned must be restored and they must be assured that at least they may depend upon a reasonable measure of protection against conditions over which they have no control. I trust therefore that if it is possible for any branch of industry to be established on a sound economic basis, protection will be given by the Government, and in considering the protection to be given to any new industry one must bear in mind, that the measure of protection must be on, such a basis as to be effective. We know that young industries suffer from many teething troubles, particularly in the beginning, and they have to face most intense competition from abroad and also have to overcome local prejudice. Unfortunately there are still people in South Africa who are not proud of the achievements of their country and who are only too ready to boost the imported article, even if it is inferior, against the locally manufactured product.

Hear, hear.

They do not realise that by doing so they may be doing an injury to the national economy of South Africa. I therefore think the country can look to the Government to give any new industries that are started on economic lines the protection which is necessary. There is another important consideration which affects manufacturers already established. It cannot be denied that they are today at a great disadvantage as compared with their overseas competitors in that much of their machinery and plant are worn out or have become obsolescent and they have not been able to replace such machinery by new and up-to-date machinery. Moreover on account of taxation and other measures, they have not been able to build up the adequate reserves necessary for expansion, nor to make sufficient provision for depreciation. I therefore hope that the Government will not think of a reduction of any of the existing tariffs until industry has had an opportunity of at least making good these matters to which I have referred. In making this plea I have no quarrel with the basic requirements laid down by the Social and Economic Planning Council. I would like to quote that to the House. Paragraph 42 of the Second Report says that—

I have sufficient confidence in secondary industry to expect that if given an opportunity to re-equip and to readjust itself to the changed post-war situation it will be found that the drawbacks which Union industry suffers in comparison with overseas countries where similar standards of living obtain, are much less than is generally assumed but I also agree that it is essential for our industries to be well organised so that production in South Africa can be carried out on the most economic basis and that the standard and quality of our goods should be kept as high as possible. Apart from normal methods of protection through the customs tariffs there are other methods of protection which I would like to bring to the notice of the Government. It is well known that manufacturers in the past in the Union have suffered very seriously from the onslaught of dumped goods, and that is undoubtedly, the House will agree, the most unfair competition that any industry can face. I am well aware of our existing anti-dumping legislation which provides against different forms of dumping to a certain extent. I was pleased to see from the amendment proposed by the Minister that the Government intends to eliminate the existing limitation of dumping duties. I must say that I have rather a grievance against the Minister in this respect, because he has stolen some of my thunder there. I was hoping that I would be able to make that particular suggestion in this House. I will not be presumptuous enough to say that it was a case of great minds thinking alike, but I would rather say that it was a happy coincidence. Anyway, my principal criticism of the existing dumping duty legislation, even if amended, as the Government now proposes, is the cumbersome way of putting that legislation into force. We know very well that when once goods are dumped in the Union the anti-dumping duties cannot be applied and we may therefore find that before this cumbersome machinery for applying antidumping duties can be put into operation, the country is already flooded with goods dumped here, to the serious prejudice of our manufacturers. For instance, we know that before dumping duties can be put into effect representations have to be made to the Board of Trade, and they enquire here, and I suppose abroad in regard to the domestic value of those goods, then report to the Minister and then only are antidumping duties put into effect by notice in the Government Gazette. By that time the country may be flooded with dumped goods. I would appeal to the Minister to introduce legislation by which dumping duties can be put into effect automatically as soon as dumping takes place, and more, that dumping duties should apply to goods already dumped in the country, because when anyone chooses to dump goods here there can be no possible prejudice or injustice to him if he realises beforehand that if he is caught out the necessary duty will be imposed on such dumped goods. I therefore do appeal to the Minister that provision should be made for dumping duties to be applied automatically. Now, to ensure sound industrial development it is very necessary that all the conditions surrounding industrial development should make for stability and continuity of production. For that reason I think that industry is entitled to ask the Government to protect it against any disruptive influence or disruptive competition. For instance we have the disruptive influence of competition from countries which pay unduly low wages in comparison with similar industry in South Africa and where the standard of living is consequently much lower. There may be disruptive competition from countries like that. But another form of disruptive competition is experienced in South Africa and that is the sale in the Union of “end of season” goods sold in overseas countries at prices very much below the cost of production, for export to the Union. That is one of the most disruptive influences in regard to which industry is entitled to look to the Government for protection. We know very well that protection by customs tariff can be set at nought if goods are sold at such a low price in the country of export, and not only that, but we in South Africa are very much in the hands of the big industrial countries which control shipping, because they can by a manipulation of freights wipe out the protection which the Government gives by means of the customs tariff by sending goods in competition with South African products as ballast in ships coming here for raw material, and in that way defeating entirely the protection which industry enjoys here. I therefore think that these are matters which the Government should certainly look into. Now, the war is drawing to a close and there is the prospect of a large quantity of redundant war stores being sold in the overseas markets by the big manufacturing countries and other belligerent nations at any old price and in any old way. There is the immediate danger of these goods being exported to South Africa and unless the Government will impose special measures against it it will be a very real danger. What will the position be in South Africa if the country is flooded with redundant war material? It will dislocate the production programme of our manufacturers and will have very serious repercussions as regards employment in this country. I therefore appeal to the Government to make provision against allowing into this country any redundant war stores. I understand that the United Kingdom Government has already taken steps to prevent any redundant military stores being dumped in Great Britain. I appeal to the Union Government also to give this matter its immediate and serious attention. In conclusion, may I just refer to one or two other forms of assistance by which the establishment of new, or the extension of existing industries could be encouraged by direct Government action. The first is that a much greater use could be made of the device of suspended duties, whereby an indication could be given to prospective investors and industrialists as to the classes of industries the State is prepared to encourage through the customs tariff. I have no doubt that the provision of such suspended duties will go a long way to encourage the investment of capital and the employment of labour in new industries. Another method would be the rendering of assistance to industries in the initial stages of their development by means of other than or in addition to the customs tariff. For example, rather than force up the costs of industries using articles produced locally under the shelter of customs tariff protection, it would be in the national interests if it is desirable to develop such industries, to assist them by way of subsidy or grant. It is appreciated however that this form of assistance should only be given in exceptional cases, after the most careful investigation into the merits of each individual case. I trust I have said enough to indicate certain positive approaches which are required for the encouragement of industrial development in the Union along economic lines. I am in full agreement with the views expressed by the Social and Economic Planning Council that a purely passive industrial policy of granting protection merely on receipt of applications will not ensure the accelerated industrialisation that is needed in the Union. The country relies on the Government following a strong, bold, dynamic policy in regard to local industry, so that South Africa may make her full contribution to post-war reconstruction and maintain her rightful place in the Commonwealth of Nations.

First let me congratulate the hon. member for Port Elizabeth (Central) (Lt.-Col. Oosthuizen) on his speech. I think we are all agreed he made it in a pleasing manner and showed that he had studied the subject he talked to the House about. I would like to point out to the hon. member, however, when he speaks of the encouragement of secondary industries this is a matter that has had, I think, the unanimous support of all parties in this House for some years.

Question.

Some years ago the Government party were very much opposed to that, and it was the Labour Party with the old Nationalist Party that made a firm stand on the question of the protection of local industries, and the hon. member’s town, Port Elizabeth, had a tremendous advantage as a result of us laying down that policy. The position had been that the customs machine was continually being used as a taxing machine. We had a policy which was passed by this House whereby secondary industry received that protection by means of a customs tariff, but we also laid down that in return for that protection we would see that the conditions of employment in secondary industry were raised to a standard of decency in conformity with the European standard in this country, and we are today still watching the position. Another point I should like to point out to the hon. member is when he suggested that primary industries, such as mining and agriculture, should be carried on at the lowest cost possible, I would say we are in agreement with that, but that must not be at the expense of the workers in industry. Rather must we see that the costs are incurred on a basis of efficiency, that is to say we want to see efficiency in respect of the people associated with primary industry in the same way as with secondary industry. The hon. member urged there should be no exploitation. I am certain in that regard the House has gone far enough to appreciate the necessity for that. Dealing with the amendment moved by my hon. friend the member for George (Mr. Werth), I think he has repeated in his amendment what has been the position in this country for some years now, and that is our taxing machine, our taxing system, is unscientific and complicated, and it is time there was a thorough overhaul. It is time we had a complete change and simplification of our method of taxation, so that everyone may know in simple terms where they stand in regard to taxation. We have direct taxation, indirect taxation, stamp duties—so many systems whereby you hit the people, central, provincial and municipal, and in actual practice—and there I agree with the hon. member for Vasco (Mr. Mushet)—it is impossible for any person on his own to discover what exactly, he is paying in taxation. On the other hand, you have today companies, and not only accountancy firms, who suggest they are expert not only in deciding the taxation that is due, but also in assisting how to avoid payment of some of that taxation. We are faced with these two positions: Firstly, if you want to know where you stand you have to employ people to help you in that direction; and, on the other hand, the person who wishes to avoid payment of taxation can consult the people ready to advise him. It should be plain to all where they stand, and the system should be simplified accordingly. When they speak of changing the taxation system I find myself in difficulties in regard to the hon. member for George, because I am afraid his idea of change would not meet with the requirements of the Labour Party in regard to change, and I am equally convinced we would have a similar position in regard to a proposal put forward by the hon. member for Vasco; there again we would be offered a change not acceptable to us. But at least we have reached this point. We are all, including the Minister, agreed that a change is urgently needed, and I put it to the Minister it is unfortunate he has not in some way indicated the lines on which his thoughts run with regard to that change. We could tell him very simply what course he could take, but I do not want to weary the Minister ….

I have indicated several times how my thoughts are running. You seem to have forgotten.

I hope the Minister will tell us again. Anyhow, I take up this point particularly. In whatever system he does adopt he should see that the higher paid income groups shall bear a great deal more of the burden than they are bearing today, and that the lower income groups will have their position eased. It has been clearly demonstrated by figures given by the hon. members for George, Fauresmith (Dr. Dönges) and Vasco that the position is unfair in some respects; in others, indeed, it is farcical. But I congratulate the hon. member for George in the progress he has made in that he now says he thinks £5,000 a year is enough for any man to enjoy by way of income.

For his personal use?

Yes, for his personal use.

Is that not fairly high?

I thought the hon. member had come to the stage when he believed £5,000 a year would be sufficient income for any man in South Africa. I think he would get on very well with that and not be short of anything. He would probably be healthier than if he were enjoying £50,000 a year. We have to bear in mind the Minister’s approach to the position, namely, that we are now passing through a transition stage, although he admits certain war taxes must go. This is where I disagree with the hon. member for George and the hon. member for Vasco; although certain taxation must go when the war comes to an end, I want to point out that during the transition period an income must still accrue to the State through taxation, as big as it is now, in order to secure that the peace will also be won by the people of South Africa, and that we shall not have our returned soldiers out of employment, or the workers in munition factories or other industries as a result of the stoppage of certain war production. Therefore just as the Minister has been supported by this country without question in regard to the moneys required to carry on the war, I believe the great mass of people are prepared to continue to bear the burden of taxation— the incidence being different, I agree—in order to secure we shall win the peace in so far as our own people are concerned. The Minister. T think, is in agreement with regard to that. But on the other hand we have it stated because we are continuing in certain directions we are stultifying industry and we are preventing the expansion of industry. In this respect the excess profits duty was referred to repeatedly. The hon. member for Fauresmith told us, to prove this non-expansion, or contraction, that the tax was £2½ millions less than the Minister had estimated.

More than the Minister estimated, it proves the other thing.

That rather proves the Minister’s case. I did not understand the hon. member very clearly. The excess profits duty has not, in fact, handicapped expansion. But I would say this to the Minister; I agree that the excess profits duty could do so. I think in most cases it is not doing so because certain people are able to secure by black market methods what the excess profits duty would have prevented if they carried on business differently. I know there are certain firms doing this. I have no doubt the £15 millions the Minister derived from excess profits duty could probably have been considerably increased if many of these culprits could be caught. But the Minister has indicated that the excess profits duty is a temporary tax and that it will go, so the test whether the taxation is sufficient or not will come later on. There is another point relating to that, and that is when the Minister speaks of his method of taxation he refers to the supertax that has undergone no change except in the method of applying it. One can appreciate that, and we have no objection to what he told us there. But I should like to say this in regard to mining taxation: I think the time has arrived—and it seems very curious for one on these benches to plead for it—for a reduction in mining taxation.

Business suspended at 12.45 p.m. and resumed at 2.20 p.m.

When we adjourned for lunch I said that I was going to put forward a claim that seems strange coming from these benches, namely to ask for a reduction in mining taxation. Well, I seriously put that forward because I want to point out to the Minister, if he is not already aware of it, that the mineworkers on the Reef have not received any direct increase in wages from the beginning of the war and the reason given by the mining industry is that they are taxed up to the hilt and are therefore unable economically to increase these wages. Now, although they got indirect benefits, these people are the one section of the community which did not receive direct benefits. The only way I can suggest to the Minister is to give more consideration towards the mines in order that they will be able to give these men increased wages. I also put it forward for another reason, namely that as he is well aware, we have the prospect of the early opening of the Free State gold fields. Yesterday there was reported in the “Argus” a statement by Sir Ernest Oppenheimer in which he put forward the view that the opening up of the Free State mines required a bold policy. He said that the companies there would require many services, and he enumerated them, namely railway connections, power, water and townships; all these things will have to be developed, and they will also be of tremendous assistance in post-war rehabilitation, and there must be a sound—I use the word advisedly—system of taxation for our mining activities which would be as fair and as static as it can possibly be made, so that the mining companies would know, and the employees on the mines would know exactly to what extent the mines can assist economically in paying better wages. Mr. Speaker, I feel that that is an essential part of the re-arrangement of our taxation that as regards mining we ought to have a considered, static mining policy as regards taxation. Another reason for it is that, as the Minister knows, the Bretton Wood conference set up a system whereby they recommend a system of gold standard in currencies, and Lord Keynes has described it as “a link of gold”. In other words, apart from whether we are in favour of the gold standard or against it, this recommendation in effect amounts to a limited form of gold standard, which from our point of view as producers of gold may turn out to our advantage. In any case I agree that we sold more gold at the higher price when off the gold standard as when on the gold standard, but now we are arriving at the stage where the war is almost over and the maldistribution of gold was apparent before the gold standard question was raised, and we have arrived at the stage where these things are going to be placed on some sound basis; and that is why I disagree with the hon. member for Fauresmith (Dr. Dönges) when he asked the Minister why in trading with India we did not pay for what we purchased there in gold and took the benefit of the Bombay gold market. Well, again I feel that if you are in favour of the system of having standardised price control it is a wrong policy to endeavour to secure an advantage occasionally. In other words, if we take, from the purely farming point of view, the farmers in this country and other countries, they discovered that a fixed agreement as regards wool is a good one; it is a long term policy and generally it worked out satisfactorily. The same with the tobacco grower in this country. They have agreements with the tobacco factories, and there again they are promised their output at an agreed figure. Therefore we as gold producers could find it advantageous to enter into some like agreement, and therefore I think the Minister should take into account that matter and he should, I think, take up the line that such an agreement should be entered into. As regards India. That arrangement with Great Britain has been cancelled now and no more gold is supplied by that country to India, but it seems to me that we would have a very good basis if we secured a fixed world price and a fixed agreement. Then the mining companies will know where they stand and the Minister will know where he is in regard to taxation of the mines, and the mineworkers will know what the position is. I hope the Minister will consider it, and I am entirely opposed to the suggestion put forward by the hon. member for Fauresmith. Now, I just wish to bring forward one other aspect, and that is with regard to agriculture. There again the Minister has extended a great deal of consideration. It is recognised that agriculture is entitled to all the assistance it can receive. In his taxation proposals that is clearly shown; the agricultural industry is left alone. In one sense, however, that perhaps is not very sound. Actually, although we are doing a great deal for agriculture a great deal more can still be done. Another point is that in respect of agricultural production whatever taxation is imposed it should be an arrangement that there will always be a guaranteed minimum price to the producer and, of course, also a guaranteed fixed price as far as the consumer is concerned. That, I think, is sound policy and the policy I trust will be continued. I want to submit to the Minister the time is overdue for reconsideration of our taxing system. Between now and the next Session of Parliament I hope he will evolve—he told us earlier on he has a policy in regard to it—I hope he will state in concrete form what his proposals are with regard to the revision of our taxation system. If he will put forward something simple, something that can be easily understood, something that does not require the calling in of extras one after the other to explain, or to determine where the taxpayers’ responsibility begins and where it ends, the result being that at the finish one is frequently still in a state of haze, if the Minister will present something that will enable the average man to understand clearly what his position is in regard to taxation, it will be something deserving our close consideration.

As one listened to the hon. member for South Rand (Mr. Christie) one could scarcely believe one’s ears that this representative of the workers should range himself with the capitalist Government to champion the greatest capitalistic enterprise in South Africa, the gold mining industry. One could scarcely believe one’s ears when this came from a member who sometimes represents himself as a socialist. It is really true that he stood up here and pleaded for a reduction of the taxation on gold mines.

With the object of increasing the remuneration to workers.

Ostensibly with the object of ensuring the mineworkers a better wage.

What is wrong with that?

Everything. Only the other day I told the hon. member for Krugersdorp (Mr. Van den Berg) he should sit on the other side of the House. But allow me to develop my point further. The gold mines derived a greater benefit by the country going off gold than any other enterprise. Today they receive for their gold 100 per cent. more than before we went off gold. The gold mines derived enormous advantage from the price of gold increasing by more than 100 per cent. than it was before we left the gold standard, without a corresponding disadvantage being created, because the price of those goods that they need did not rise in proportion to the rise in the price of gold. The price of machinery did not increase to that extent, taxation did not mount in that proportion, and the wages that they pay were not augmented in the same ratio. Consequently, taking everything into consideration the gold mines derived an enormous benefit. Our Party, though apparently not the Labour Party, has from the outset urged that the mineworker should be granted a pro rata benefit of the increase in the price of gold, of the benefit that flows from that.

We say that too.

The means we suggested to enable the mineworker to receive his rightful share is that the mine-owners should be obliged to set aside a portion of the enhanced price to represent the mineworkers’ share of the profit. But what does the Labour Party do? They come here indeed and say: Seeing the mineowners will not do it—they say the mineowners cannot do it—seeing the mine-owners will not take this step, the Government must meet them and tax them less, on condition that the mineowners use this to pay higher wages to the mineworkers. They do not stato that the mineowners cannot pay higher wages. They know they can, but they assert that the Government should tax them less.

Last year you maintained that the mines could not afford to pay compensation for miners’ phthisis.

What is this? If the mineowners come tomorrow and assert that they are not in a position to pay the extra compensation to the sufferers from miners’ phthisis, if they cannot even pay the present rate of compensation, will the Labour Party stand up and say that the Government should reduce the taxation on the mineowners, so that they can pay the extra compensation to victims of miners’ phthisis. In this way the Government will eventually assume the rôle of philanthropists in respect of our richest industry. That is the present attitude of the Labour Party. That shows clearly that the Labour Party has not during the last few years been the mouthpiece of the workers, but that they are simply the tools of the mineowners. I pass on to another point. I must honestly admit that the hon. member for South Rand ever since the days when he was member for Langlaagte, has retrogressed terribly in every respect. Look, for instance, how he argues that because we should have stability in regard to the price of gold, we should refuse to sell our gold in India when a higher price is being paid for gold in India. In other words, that we should sell through the Bank of England and allow the bank the tremendous profit.

How much gold do we sell in India?

It is stated that we import from India goods to the value of £11,000,000. Why should we not derive the benefit from the higher price of gold in respect of our imports from India?

Will India buy our gold today?

Where is the proof that this will not be the case? In fact, it is not a case of buying but of payment for our imports from India. The Minister of Finance in order to escape from this delicate position has said: “Perhaps India will refuse.” The hon. member for Hospital (Mr. Barlow) seizes on this and says India will refuse. The Minister only said “perhaps”. I agree that we should have stability in regard to the price of gold, but if the Bank of England takes our gold and sells it to India at an enormous profit, why should be given an opportunity to the middleman, the Bank of England, to make this enormous profit; why cannot we ourselves gain the benefit from that? This is no ordinary business transaction of the Bank of England, but simply the making of extra profit on the sale of our gold. Now I should like to turn to the new member for Port Elizabeth (Central) (Lt.-Col. Oosthuizen), and I want to congratulate him on his address. It was refreshing to hear from Port Elizabeth a clear note on behalf of our country’s industries. I only hope that the hon. member will stand firmly by his attitude. Or if he does eventually—I hope that it will not happen in his case—go the way of all Saps, and that is to come under the crack of the Whip, like the hon. member for Hospital, also eventually put the interests of the country in the second place and the interests of his Party first. I hope not. I hope that the fine note that he sounded when he preached with so much conviction a national policy for the strenghtening of our industry will continue to be maintained by him. If I may direct a further word to the hon. member for Vasco (Mr. Mushet) I want to say it was also encouraging to hear and to see that the hon. member for Vasco notwithstanding the merciless hiding he got a little while ago from the Minister of Finance in this House because the hon. member for Vasco dared to differ from him, had yet the courage this morning to blow left and then to blow right.

He is now blowing both ways.

Yes. I hope that he will not talk in the one direction and vote in another direction when it comes to a division. The hon. member for Vasco has virtually endorsed in every way the statement that was made here by the hon. member for George (Mr. Werth) and the hon. member for Fauresmith (Dr. Dönges) in respect of the effect of the Minister’s taxation system. The only difference between him and the hon. member for George is that he says that he agrees that the taxation that the Minister is imposing is confusing and unfair and that it will have the effect of retarding industrial development, he agrees entirely with that, but it differs in this respect from the hon. member for George—that the hon. member for George should not vote against the Minister of Finance’s taxes, should the Minister not give in. Does the hon. member for Vasco really think that we are going to knuckle under to the whip of his Party caucus? Does he really think that we as the responsible Opposition of this House will cringe and plead with the Minister and that he should never venture to vote against him? No, let the hon. member for Vasco, seeing he has revealed the courage notwithstanding the severe thrashing he recently received from the Minister, to express his conviction that the Minister’s system of taxation has a deeply detrimental effect on the country’s industries, let him for once summon up sufficient courage if we should divide on this question, to show to the Minister that he has the courage of his convictions.

The Minister agrees with me.

The Minister agrees with the hon. member for Vasco? It appears to me that the hon. member entirely forgets what happened during the Budget debate. It seems to me that the Minister did not strike hard enough.

Come and look.

I hope the hon. member will not play the same little game with us as the former member for Calvinia (Dr. Steenkamp) who was continually offering to show us his scars. Now I refer to the arguments that were adduced by the hon. member for George and the hon. member for Fauresmith. It was very clear, when one noted the attention with which the whole House listened to them, that they not only excited interest even amongst members on the other side of the House who are really interested in this matter, but it was clear that the greatest attention was focused on their positive recommendations in connection with the exposition they gave of the deleterious effect of the Minister’s policy on the country as a whole and on industrial development in particular, as well as to the concrete suggestions made by the hon. member for Fauresmith for the effecting of an alteration with a view to arresting in a certian measure this detrimental effect of the Minister’s policy. I want to express the hope that the Minister himself will bestow so much attention on it that he too, if he cannot do it immediately, at any rate before he eventually comes along with the taxation itself will give attention to this and that he will make efforts to put into practice the valuable hints which the hon. member for Fauresmith especially gave to the House. In regard to the excess profits duty in so far as it affects companies the hon. member for Fauresmith suggested to the Minister that even if it was by way of a temporary compulsory savings fund, a portion of the excess profits duty should, be taken and placed in a savings fund so that when the war is over a portion can be returned to industries for the building up of reserve funds. In addition to that I would suggest this to the Minister for his consideration. The new companies in industry established shortly before the outbreak of war are in particular having a hard time. Not having a pre-war standard they are hard hit by this tax. Many of them have already lost a large portion of their capital at the outset in the shape of promo tion costs connected with establishment. Apart from other expenditure that arose at the commencement and that falls under promotion costs, I want to invite the attention of the Minister to the fact that the majority of these companies when they wanted to sell shares at the inception gave the shares to individuals to sell, to the canvassers, allowing a certain percentage as compensation. This actually represents part of the promotion costs. I think I am not over-stating it when I say that in some cases the companies lost 10 per cent. to 20 per cent. of their capital in the costs of promotion.

On commission.

The commission or remuneration is one of the factors pertaining to promotion costs. But taking it altogether it was often from 10 per cent. to 20 per cent. If wages were paid to these people the Receiver of Revenue would probably accept it as expenses, for the purpose of income tax, but I understand that promotion costs are not allowed. If that is so I would ask the Minister to effect an alteration. We urge the Minister to allow a certain percentage of the profit to be used for building up reserves, or as a fund for the purchase of new plant, seeing that during the war years plant was excluded, but I want to ask the Minister to allow the smaller companies as well to set profit against promotion costs; this would help these small companies. I understand that at present they cannot deduct it for income tax purposes, and I do not think this is right. Then I come to the part of the taxation proposals under head 2 (1) and this is where the Minister is going to make an exception in the case of the salaried person who is a partner in the business—though he receives payment in the form of a salary —and is going to make him liable for excess profits duty. Hon. members will know that people who draw salaries are not liable to excess profits duty. Even though a man’s salary has soared in the war years considerably above the pre-war standard he does not pay excess profits duty. If before the war he was earning £1,000 and he is now earning £3,000 he does not pay excess profits duty on the diffence between his salary now and before the war. The result is that many people who want to evade taxation—I am referring to individuals—have simply converted their business into private companies with limited liability, and then they have given themselves a salary; then if there were two or three partners they have divided the profit in the form of salaries, and there is no doubt that in this manner evasions have occurred on a large scale.

How do they work it?

They simply convert their business into a private company, and the persons who were previously the owners and partners are appointed as managers and assistant managers, and then they draw their salary.

The companies, of course, receive a smaller reduction.

Yes, but I am now dealing with the way in which taxation is evaded, and I assume that the new form of taxation has been instituted in order to prevent this.

Not specially for that purpose.

It is going to have that effect. I am not going to make any objection to that, because taxation is avoided in that manner, and this measure will prevent it to a great extent. I have no objection to that. It only shows the contradictions in the Minister’s taxation proposals. In other words, the salary drawers are not to be excluded from the tax. If a man drawing a salary in the war years works himself up so that he draws salary far in excess of his pre-war standard, why should he be exempted while another individual who develops his business by hard work—I am not referring to a war profiteer—why should he be taxed? He may be a doctor or a farmer or a shopkeeper and he has expanded his business in a natural way—as the hon. member for Fauresmith has stated—and thereby brought his income above the pre-war level. Why should he have to pay excess profits duty and not the salaried man? Because the salaried man is exempted the law is being evaded in this way. Under the Minister’s new proposals it can no longer be done, because where a person has an interest in a company and draws salary, his salary will be subject to excess profits duty. I have no objection to offer to that, but there is one difficulty, and this again flows from the fact that the Minister is not acting consistently. Take a bona fide case such as that to which my attention was directed yesterday, of a person who even before this special form of tax was instituted, was a small shareholder or partner in a business. He was an employee, but he had a small share. There are people who do that, they give their employees a small share in the business. Now the individual, owing to the fact that he has a small share in the business, though his remuneration in reality is nearly all in the form of salary, will be liable to the tax, while another person who may have a much larger salary in a similar business, but no share in it, will escape. Here again we have a defect that ought not to be here. It emerges from the lack of consistency on the part of the Minister in connection with his taxes. All ought to be treated on an equal footing, and he should not make one class subject to a tax and not the other. There is another point in regard to the excess profits duty where it weighs heavily and unfairly. Let me take the case of a farmer. We are experiencing one of the worst years of drought we have ever had in the history of South Africa. I want to refer to the northern part of the country where there are large ranchers. As a result of the drought and other reasons I will not enlarge on, many ranchers and even sheep farmers cannot obtain grazing for their stock. Supposing one of them has to sell his cattle because he cannot obtain grazing and he sells them for £5,000 or £6,000. His pre-war standard was perhaps £1,000 or £1,500. What happens now? The Minister takes the greater proportion of the £5,000 or £10,000 with the excess profits duty of 15s. in the £. That farmer is selling the stock solely for one reason, namely, that on account of the drought he is unable to obtain grazing. His object is to use the same money again for the purchase of stock immediately the rains come, but he is not able to do it now because if he sells his tock he has to pay, for everything above his pre-war standard, 15s. in the £ in the form of taxation to the Minister. That breaks the man. The Minister’s answer will be: Yes, but if he buys cattle next year it can again be shown as expenditure, and in that manner the matter adjusts itself. That is not the case. If the man, for instance, has to pay a tax of 15s. in the £ on £10,000 the sum of £8,000 goes. What is he going to buy with? He has a balance of only £2,000. How can he again build up his herds? The Minister has taken £8,000 by way of taxation. It is easy enough to say that the man can buy again and then the amount will be regarded as expenses, and in this manner the matter will be adjusted, but in reality that is not the case. It is only rectified on paper. Where is he to get the £8,000 that he has paid to the Minister? The Minister will not refund it to him before he first buys the stock, and that may be two or three years subsequently. Where is he going to find the money in the meantime? There will not be many of these cases, but they do exist and I know of some. Cannot the Minister in a case of this sort, where a bona fide farmer has to sell his cattle in these circumstances, take the power not to levy the tax but to give the man 12 months or 18 months time to buy more cattle and then not to levy the tax. Because this is no longer a tax on income but a levy on cattle, and in this way you are going to ruin a man. I hope that the Minister will bestow attention on this matter and that he will do something to meet the position.

I think if one follows the remarks of the hon. member for George (Mr. Werth) and takes the point of view that he used, one would agree with a good deal of what was said this morning and support the criticism. But the whole of the criticism of the Opposition, as far as I can judge, was based on the remark of the hon. member for George “as far as South Africa is concerned the war, for all practical purposes, was over and the changeover in taxation should be made”.

No, that is just by the way.

Not only that.

Your interpreter let you down:

I think there may be a great deal to be said if in point of fact the war were over and I will follow the hon. member for Fauresmith (Dr. Dönges) much further when he quoted some of the remarks made by other Ministers in regard to the post-war policy, but before doing that I would like to take the House back to a matter a couple of years ago and deal with the opposition of the Opposition then with regard to this matter. They were then dealing with the question of taxation and the financial position, and the hon. member for Fauresmith in a very long speech which he made in February, 1943, pointed out that even if Britain won the war, South Africa would lose. That has been the attitude of the Opposition right through, that they did not want Britain to win the war.

Now what has that got to do with taxation proposals?

Because it was on account of the war that these taxes were proposed.

We would not have had the taxes if we did not have the war.

I do not want to deal with the money raised in neutral countries, but we know that neutral countries like Ireland which tried to keep out of the war were ruined.

I will tell you about Ireland. What does the “Economist” say?

The hon. member for Fauresmith challenged my interjection this morning when I challenged the accuracy of his remarks when he quoted Sir John Anderson. He has made a speech before and last time I also challenged the accuracy of his speech. I said then, and say now, that what the British Chancellor of the Exchequer provided for was a remission of 20 per cent. of the E.P.D.

Does that alter my argument?

But they were restricted to capital expenditure with regard to the industrial rehabilitation of industrial firms. But where the hon. members opposite put forward that plea and urged that the Minister should now adopt that course, they forget that in effect they are now asking for a remission of 20 per cent. on the E.P.D. which should be set aside as a refund to business for rehabilitation purposes, which reduces the E.P.D. tax payable in this country to 60 per cent. as against the 100 per cent. which is imposed in Britain.

Your arithmetic is shocking.

I understand that the hon. member suggested that on the present E.P.D. tax of 75 per cent., 20 per cent. or one-fifth should be set aside for industrial purposes. What is one-fifth of 75 per cent.?

That side of your argument is correct here but not in England. Do not compare 60 with 100. Compare 60 with 80.

The hon. member suggests that I should compare 60 with 80, but if you compare the taxes of this country with taxation in Britain, you must get back to what the individual pays and in Britain he pays 100 per cent. of which 20 per cent. will be repaid under certain circumstances.

Here it is 75 per cent. and 20 per cent. will be refunded.

But he has only paid 75 per cent. so that he is better off.

Apart from the raising of the standard last year.

I agree with the hon. member that there is far more force in his argument for a reconsideration of the basic standard. That is quite a different matter, and that, I think, is the soundest part of the hon. member’s argument, to have a revision of the basic standard following the lines of Sir John Anderson in Great Britain.

But going much further.

I am not arguing the question of degree but the principle is the same, giving an increase of the basic salary. That is a matter which should have been introduced some time ago, that is, if it is to be introduced at all. I very much doubt the wisdom or fairness of introducing it now, when in the ordinary course of events the E.P.D. tax must come to an end very soon. I think that almost at once after the war ceases that tax must be removed. But I do say this, that in that matter, particularly in view of the increase in the cost of living and an increase in certain other costs, that should be taken into consideration for income tax purposes, and there is much force, in the contention of the hon. member. But there is this vital point that if you are going today to revise the whole of the basis, of taxation, then it means, I think, a reconstruction of the whole of the Budget. Now, the only time, surely, when that argument should have been advanced was at the Budget stage. They should have tried to convince the Minister then. Hon. members must admit that to put forward proposals which must have the effect of curtailing the revenue which is coming in through this tax, which must run into millions, is a restriction of the Budget. But what I do feel is this, that the Minister should have adopted the attitude adopted in Britain. What was the attitude there which Sir John Anderson referred to only a few days ago? We have only had short extracts appearing in the local Press, but he said that “he did not propose any major tax reduction and that the present taxes should remain unchanged for the time-being, although he was convinced that major reduction would be made some time”. He went on to say that if the war took such a turn that it would be possible to revise the basis of taxation, he, would be prepared to have a second Budget later on in the year. I would venture to suggest to the Minister here too that this is a matter he might fully consider, and I think he is in no way bound to carry on like this for twelve months. If circumstances during the next few months turn out to be such that a revision of the basis of sortie of these taxes could be considered in the light of reduced expenditure, it is a matter which he should consider. But I say this, that with all the goodwill in the world, to ask the Minister at this stage to revise the whole of his tax structure by adopting these proposals would be unreasonable and quite impossible and would mean a reduction of the income derived from the E.P.D.

Even if there is a deficit, does it matter much?

I have vivid recollections in this House of Ministers of Finance being attacked by the Opposition for having deficits and as being unable to forecast properly.

They even attacked me for borrowing.

We are now charging you with borrowing.

The hon. member seems to want it both ways. They ask the Minister to do one thing, and if that does not suit them, they want a complete change the day after. After all, the Minister is charged with a certain responsibility in regard to taxation and in this particular matter there are, I think, items under these particular heads of taxation which definitely call for review. There is no doubt about it that the hon. member for George (Mr. Werth) was perfectly right when he pointed out some of the serious anomalies which exist. The Minister admits that they exist.

But they continue to exist.

No, the Minister has indicated that he is investigating the matter.

He said that last year too.

With a view to reconsidering the whole basis of taxation. But he has already indicated that a revision of taxation can only take place when the E.P.D. goes because naturally the revenue which accrued through that must be replaced by some other form of taxation. I want to ask the hon. members opposite now: Are they prepared to support in this House that the E.P.D. should be at once removed to enable the Minister of Finance to institute a revised system of income tax, normal and super tax? Are they prepared to support a definite proposal at once to abolish the E.P.D. and to revise income and super tax?

Of course.

Let me point out that already in the higher incomes you are nearly up to the maximum, and if you put it up to the full 100 per cent. of income it would not give you the additional income which you get from the E.P.D. Hon. members must be realistic in this particular matter. Other businessmen would say that the E.P.D. must be abolished. But could you do it? There are people who suggest taxation of uncultivated land, but we know what outcry would come about.

Why not deal with our suggestion not to abolish it altogether?

After all, whether you reduce a tax by half of one-third you still have to make up the loss of revenue.

We have shown how it could be made up.

Surely the Minister is one of the best judges, and I think in these days, whenever the Minister has come forward, in the last few years, with any proposal for taxation, whatever it was, it was opposed by the Opposition.

Oh no.

Can hon. members tell me of a single tax which was not opposed? When they put a small tax on wine the hon. member for Swellendam (Mr. S. E. Warren) opposed it.

I still think it was wrong.

We know perfectly well that in these days, no matter what tax is imposed, it will be used as a stick to beat the Minister of Finance. I want to refer to this question of the British House of Commons and to quote fully this statement about the 20 per cent. E.P.D., so that there will be no future misunderstanding as to what the British position is. The British Chancellor of the Exchequer on 25th April, 1944, said this. The hon. member has quoted extracts before but I think it should be on record so that the country will know that what he proposes to do is an entirely different matter from what was carried out in England. He was talking about the Excess Profits Tax and said—

That is just what I said.

What we have done is this: this 25 per cent. was not left in the hands of the Treasury. It was left in the hands of industry. 25 per cent. was left in the hands of industry. Hon. members say that is not sufficient. Possibly that is correct, but one must remember that provision is also made in the E.P.D., after the end of the war for any refund where losses were incurred. I feel certain that if the proposal is made here now of a 20 per cent. reduction under that head, I do not know what the figure would be, but it would be a very severe curtailment of revenue to the Treasury, and I say that such a proposal is not reasonable. But I do feel this, and on this particular point I think there will be general agreement, that on the question of the basic allowance, whilst it may not be possible now, the Minister in his reply might give serious consideration to that proposal, because I believe there is a great deal to be said in view of the increase of expenditure taking place, particularly from the professional man’s point of view, that there is a case for an increase in the pre-war standard, or in the basic rate, which should be allowed. And as far as that goes, I think the Minister might be asked to give consideration to that. But with regard to the other matter I feel that the House would be on dangerous ground in asking the Minister today to reconstruct his Budget, and to come forward with fresh taxation which I am certain the House will object to.

Our system of direct taxation is admittedly a very complex one. It must however be borne in mind that the system has largely been inherited by the Minister of Finance. It has not been scientifically conceived as a whole. It has grown up by a series of patchwork amendments and it has been further complicated by the war-time measures which were grafted on to the original structure. Now, the very complexity of the structure makes it impossible to effect a revision without a careful, searching and expert enquiry, such an enquiry as the Minister is in fact carrying out. But this apparently does not satisfy the hon. member for George (Mr. Werth), or any of the Opposition. It is perfectly clear what the Opposition are aiming at. They are agitating for the immediate removal or drastic reduction of the war-time taxation measures, particularly the excess profits duty. Now, these wartime measures have been debated so fully and so frequently that there is very little new that one can say, either for or against, in this discussion. There is, however, one observation I feel bound to make, and I think it represents the very kernel of the matter. The E.P.D. is admittedly an unscientific tax but if there is one measure which can be justified under present conditions it is the E.P.D. What we have to bear in mind is how the excess profits arise in the first instance. In war-time the Government is the guarantor of the market. Its abnormal expenditure inundates the whole economic field and ensures profits for all. The Government therefore is logically entitled to syphon off a very large measure of the profits due to its own abnormal expepditure. And my point is that as long as this abnormal expenditure continues, even if actual hostilities cease, the Government would be very ill-advised to remove or to reduce these war-time measures. The transition from war to peace will be marked by a reduction in this expenditure and therefore the need for these measures will automatically fall away and they must inevitably disappear. The hon. member for George argues that these measures stifle production, and he invokes the authority of no less a person than Dr. Van der Bijl to support his argument. He fears that industry will be left with insufficient financial resources to maintain and expand production. Le met remind the hon. member of the £150,000,000 lying idle in the banks at the moment. Presumably all that money is waiting to be utilised either in existing enterprises or in new undertakings, and to that extent that money must stimulate the national economy.

Then why does not the E.P.D. disappear?

What surprises me is this, that neither the hon. member for George nor Dr. Van der Bijl appear to have taken into account the declared postwar policy of the Government. Let me read a passage from the Government White Paper on Post-War Reconstruction under the heading Industrial Development. This is what it says—

Now, what does this mean? It means that the Government has decided to adopt what has come to be known as a counter-cycle policy. In more explicit terms, it means that the Government intends to compensate for the contraction and expansion of private investment by the expansion and contraction of public works. In other words, the Government accepts the responsibility for maintaining general economic activity in peace-time at least at the same level as in war-time.

That would be the first time in the history of the world that a Government could do that. You would know that if you know any economics.

The hon. member for Gezina (Dr. Swanepoel) merely displays an invincible ignorance. I advise him to study the New Deal experiment in America and the even more successful experiment in Sweden.

I would suggest that you study that. I know more about it than you will know in twenty years.

What the hon. member says does not show much knowledge. The Opposition are apparently convinced—they often say so—that there will be a great depression after this war that industry will languish and unemployment will be widespread.

Unless you take steps to Counteract it.

They base their prophecy on what happened after the last war. They feel that history will repeat itself and that we shall all return to the epoch of idle hands and hungry mouths. It seems to me that a study of modern economic trends, such as the hon. member for Gezina obviously knows nothing about, offers a safer guide to the future ….

You only know medicine.

…. than the simple and naïve assumption that history will repeat itself for the benefit of the Opposition. One thing is clear. The fact that there was a deep depression after the last war favours the assumption that we have learnt some valuable lessons from our last experience and we shall not make the same mistakes again. Personally I am convinced that neither Britain nor America will pursue a sharp deflationary policy after this war, the deflationary policy which was largely responsible for the last post-war depression, and if our own Government brings its post-war policy into line with overseas policies I see no reason to fear a depression after this war. Now, I would like to turn for a moment to the hon. member for Fauresmith (Dr. Dönges). The hon. member appears before us as a lawyer and an economist. That is a very formidable combination. But unfortunately the skill of the lawyer frequently conceals the inadequacy of the economist. He belongs to a school of thought which says that taxation must not exceed 10 per cent. of the national income. He is obviously concerned that taxation should not make serious inroads into private savings and private investment. It is easy to see where the hon. member stands. He is an exponent of laissez-faire. He clings steadfastly to the old-fashioned notion that the function of the State is merely to hold the ring and private enterprise will ensure the best results. I fear the hon. member as an economist belongs to a vanishing epoch. In place of the old-fashioned notion that prosperity is dependent upon the unlimited operation of private enterprise, there has grown up a belief that the State must ensure the social security of its citizens. This means state intervention in economic affairs. And although laissez-faire still has its stalwart supporters and State intervention its bitter opponents, the new social philosophy is the dominant trend, and I fear the hon. member for Fauresmith (Dr. Dönges) has not kept up with this trend. Let me read to him a very interesting passage from report No. 3 of the Social and Economic Planning Council. This is what it says—

It is clear that if we are going to have social security, taxation will rise as high as 20 per cent. of the national income. The hon. member need not be alarmed. That would not be a bad thing but a good thing for the national economy. Sir William Beveridge has defined social security as a method of redistributing income so as to provide for first things first. That seems to me an admirable definition. By a redistribution of income we can provide an immense stimulus to production, especially to the production of consumer’s goods; to use the language of Lord Keynes, we shall reduce the “propensity to save” but at the same time we shall increase the “propensity to consume.” At the present time we have a state of affairs in which the rich who have the money, do not want the goods, and the poor who want the goods, do not have the money. By taking money from the rich, in whose hands it accumulates faster than it can be invested, and transferring it to the poor who will spend it very quickly—we shall enormously increase the capacity of the community to consume; in other words, we shall give the producer exactly what he needs, namely, a market for the final product of industry. We shall set people to work in the field of consumer’s goods, and thus we shall make for full employment and prosperity. And, Sir, a redistribution of income, so far from acting as a barrier to capital accumulation, will actually increase it, for although savings will represent a smaller proportion of the national income, the national income itself will so greatly increase that savings will represent a higher absolute amount. Perhaps a simpler way of putting it, is that in the future we shall have to rely for savings, not on the large surpluses of the few, but on the small surpluses of the many. In conclusion I want to say this; it is clear that in the social service state of the future, the system of direct taxation must occupy a position of pivotal importance. I believe that the hon. Minister of Finance is fully alive to this fact, and I am confident that he will accord taxation reform a high priority in our plans for postwar reconstruction.

The hon. member for Pretoria (Sunnyside) (Mr. Pocock) made the extraordinary statement that if we had not been in this war, the financial position of this country would have been much worse than it is today, and, quoting an example, he referred to Ireland. May I refer the hon. member to what the “Economist” of the 11th December, 1943, said about Ireland. In a few words it is this—

I have no doubt as to whose opinion I should accept when it comes to choosing the opinion of the “Economist” or the opinion of the hon. member for Pretoria (Sunnyside).

That was two years ago.

The position of Ireland will be comparatively better today because all the other countries have gone much further into debt, and the hon. member for Pretoria (Sunnyside) is aware of that. I wish to refer for one moment to a question which was raised by the hon. member for Fauresmith (Dr. Dönges), and that is the question of the sale of our gold in India. As hon. members are aware, this side of the House put up a terrific fight last year for the privilege of obtaining the higher price in India for South African gold. After lengthy negotiations and after a continued struggle, the Minister made an agreement with Great Britain that we should share in the profits realised on the gold sold in Bombey. Now I believe this arrangement has fallen through. The Minister told us that that was due to the gentleman’s agreement made with Great Britain to take all our gold during the war. May I take this opportunity of stressing that if it is due to such an agreement that we cannot get the best price for our gold then it is a bad agreement and the sooner that agreement can be revised, the better it will be for this country and the better it will be for the Minister and his position.

How will it be better?

It will give the Minister more money and it will not be necessary for him to levy taxes to the same extent. The time is overdue that we should take cognisance of the important part that the gold mining industry is playing in the economic structure of this country.

We know all about that.

The Minister does not seem to know all about it.

And, of course, you do.

Why should we allow our gold to be sold under this agreement at prices lower than we can obtain for it? We know that our gold and the gold of other countries is flowing into the neutral countries which are not engaged in this war, and it is being sold to various neutral countries at a higher price than what we get for it in Great Britain. We feel that we are in duty bound to stress this matter until such time as the Minister revises this agreement and sees to it that we get the highest price which is offering.

With whom are you going to make the new agreement?

Not with the hon. member for Hospital (Mr. Barlow). I wish to support the amendment of the hon. member for George (Mr. Werth). The amendment stresses the necessity for a revision and simplification of the taxation system. Thera is not a single member on the Government side who did not agree with the hon. member for George that a revision and simplification of our taxation system is urgently required, nor have I heard anyone on the other side stating that the time for the removal of the existing inequalities in our taxation system is not overdue. The last point on which there seemed to be some doubt, is whether the present taxation system is retarding the economic development of this country, and I agree with the hon. member for George that it is retarding economic development in this country. The first question is: Why this revision? It is my opinion, for what it is worth, that the present system has so many complexities and so many uncertainties that it is essential to revise it. There is general complaint from the agricultural industry as such; there is a considerable volume of complaint from the commercial community of this country because of the uncertainty of the tax position in this country, and the same complaints are heard from the industrial community, because when they undertake a new venture, they are not aware what the effect of the taxation system will be on that venture. We had an outstanding incident in Pretoria some time ago when a very big building contractor undertook to construct a large number of small dwelling houses. He, accompanied by his attorney, went to the Receiver of Revenue in Pretoria. They placed all their cards on the table, and it was agreed that a certain system of taxation would be applicable to this undertaking. By the time the tax had to be paid there was a new man in the revenue office and he said he was not bound by the assurance or the undertaking given by his predecessor; and so much more taxation was charged on this venture that it was practically thrown out of existence. That is the position with which we are continually faced in this country. That is one instance with which I am personally acquainted. I know that this system has caused an enormous amount of dissatisfaction. The time is overdue —and nobody can argue against the view point that the time is overdue for a revision of the taxation system. We should know more about the tax position and we should have more certainty in regard to the amount of tax, however high it is. I say this with some restraint, but there is no doubt that there is also an enormous amount of unsympathetic administration and unnecessary volumes of correspondence, of forms to be filled in, of questions to be answered and lately there has been a system of underground and underhanded detection to find out whether the people have been submitting the correct returns. In fact, I am inclined to think that the Minister of Finance has employed some of the staff of Al Capone, in collecting his income tax.

Set a thief to catch a thief.

We suggest that there should be a revision of the system on sound principles of taxation, and when we refer to sound principles, we cannot help going back to the maxims of Adam Smith, as subsequently interpreted by men like Sir Josiah Stamp. In his book, “The Fundamental Principles of Taxation”, he repeats the maxims laid down by Adam Smith many years ago. In the first instance he quotes the maxim of the equality of taxation—

I maintain that that is not the position under the present taxation system, and I hope to prove later on that it is definitely not the position. As a matter of fact, I think figures were mentioned here by the hon. member for Pretoria (Sunnyside), and by the hon. member for George showing that that is definitely not the position today, and that there are very serious inequalities in the amount of tax to be paid by people earning the same income in this country. By equality of taxation is further meant equality in accordance with the faculty theory, that is, not from the subjective point of view— how the person feels about the tax—but from an objective point of view, taking into account the man’s ability to pay. In any case, judging by our experience we do not expect the Minister of Finance to consider the taxation from the objective point of view, because our experience is that he has never taken into account the ability of the person to pay. We feel that in accordance with the faculty theory, the taxation should be based on the nett profits on gross income and the nett value of the property, and that it should leave unimpaired the productive powers of society. Can we say that that maxim is applied to our present basis of taxation? According to what the hon. member for George has said, our system of taxation does not leave the productive powers of our society unimpaired. Equality further means that the taxation system should conform to the principle of formal justice, that is if it is correct that A should pay a certain tax in certain circumstances, then it is also correct that B should pay the same tax in similar circumstances. There is no other point on which our taxation system diverts further from the principle of formal justice than on this particular point, and the fact that the amount of tax as between one man and another differs so considerably under the structure which our taxation system has adopted during the war, is alarming. Sir Josiah Stamp then goes on to quote the maxim of certainty—

I need not stress that. Members on the Government side particularly have stressed it, and I think the hon. member for Pretoria (Sunnyside) has stressed the fact—and so has the hon. member for Vasco (Mr. Mushet)—that under the present system the taxpayer does not know what amount of tax the Government will demand from him. There can be no doubt therefore that the taxation system of today does not conform to the second maxim either. As I have said, this is one of the great points of injustice in our present taxation system. In the third instance Sir Josiah Stamp mentions the maxim of convenience—

The Government has levied this special taxation on fixed property, and in addition to that it collects excess profits duty on transactions of that type. If a man sells a property on a hire purchase system today, the final payment of which will probably be made in 20 years time, the full amount of the tax is immediately due, whether it is convenient for the person to pay it or whether it is possible for the person to pay it. I therefore maintain that these war-time duties—and I am referring specifically to the fixed property profits tax and the excess profits duty—do not conform to the third maxim. A further maxim mentioned by Sir Josiah Stamp is that of economy—

In addition to this it is generally accepted today that there are certain other maxims on which we are all agreed, for instance, that it is more productive to obtain your revenue from a small number of productive taxes than from a large number of unproductive taxes, that it is better to have a system of taxation in which there would be an automatic increase in relation to the wealth of the country increases, etc., etc. These war-time taxes levied by the Minister of Finance do not comply with any one of these maxims, and although Sir Josiah Stamp says that these maxims are now inadequate to the practical task of bringing under judgment the many difficult issues which confront us, we cannot say that these sound foundations should be overthrown, because we have to build a very big structure on top of that. The position is simply that the bigger your structure the sounder your foundation must be. The Minister should place the whole system of taxation on a sound structure and foundation, and then the big structure on top of that foundation will not be so rickety as it is today. I would like to refer specifically to the fixed property profits tax. This tax, to my mind, is nothing but a land-tax, and unfortunately it is a tax on some land and not on all land. If it is desired by the Minister that land should be taxed in South Africa, then I consider he should tax all land. This is a discriminatory tax as between pre-war purchases and subsequent purchases. All the great land dealers, all the great capitalists, who saw that war was imminent, ever since 1935, have purchased large tracts of land. I know of millions of morgen of land bought by these people in the Transvaal.

Millions of morgen?

I know of enormous property transactions that were entered into in Johannesburg and Pretoria, and that was just before the war. All these people are today able to make enormous profits on those properties, while the unfortunate man who bought after the commencement of the war who may, in fact, have bought a day after the outbreak of the war, is subject to this discriminatory tax. It does not mean that the man who bought his land during the war will make a greater profit than the man who bought land before the war, in fact, those who bought land before the war, are bound to make a bigger profit than those who bought during the war. That being so, what justification is there for taxing the dearer land to the extent of 13s. 4d. in the £ in some cases, while other land transactions are not subject to this tax at all? I have never come across such an unjust and unfair tax in any country in the world. I shall be glad if the Minister of Finance will give his attention to this. I say it is the most unfair tax that I have come across in any country anywhere in the world. The other day the Minister informed the House that this tax had been very successful indeed, because it had maintained land values at a very stable level. As a matter of fact, if I remember correctly, the Minister quoted that the figure of land prices had gone up by round about 30 per cent. only, and he contended that that proved how successful the tax was. But if land prices have gone up by 30 per cent. only, then there is no necessity for the tax. It is not land prices which have gone up. It is the purchasing power of money that has depreciated by more than 30 per cent. and the Minister knows it. If you have to keep down the price of land in such an arbitrary fashion because your money is depreciating to this extent, then it shows that what I am saying here is true, that there is no justification for this unfair tax whatsoever. This tax does not only hit the big speculator and the big man because, as I have said, they are the people who bought their properties before the war. Very often—and more often than not—it is the small man who is hit by this tax. The Government servant, the railway servant and the working man. We had the case in Cape Town last year—and this instance was quoted to the hon. Minister in this House—where this tax was levied on the profit made by a man who was transferred by the Government from Cape Town to Pretoria. The loss which this man suffered as a result of his transfer was £1,000, due to the fact that he had to dispose of his property in Cape Town and try to purchase another property in Pretoria. The so-called profit he made on his property—in actual fact it was no profit because he got cheaper money when he sold his property—but the so-called profit was taken by the Government. When this man got to Pretoria he had to purchase another property and he lost £1,000 on the transaction. I say it is the duty of every member in this House to see that we do not allow a tax of this nature to continue, a tax which robs the poor man of his savings, a tax which is so distinctly unfair towards the working man who slaved for years and saved with his wife in order to accumulate £1,000.

It stopped inflation.

I am coming to that. It is my opinion that this tax has not succeeded in keeping the value of land down. In fact, I maintain that it has enhanced the price of land. The figure that was given to me by the Minister’s Department about a year ago, was that only about 10 per cent. of the properties in South Africa are subject to this tax, and consequently this tax could not possibly have kept properties out of the market, because even if it kept 10 per cent. of the properties out of the market, the price of the 10 per cent. could not have affected the remaining 90 per cent. to such an extent that the Minister is justified in saying that land values have gone up by 30 per cent. But that is not a true picture. Even if this tax only affects 10 per cent. of the properties, then I maintain that only about 10 per cent. of properties come into the market during any one year for sale. The old established families do not sell their houses. The rich man does not sell his house. The wealthy farmer does not sell his house, nor does the mining magnate sell his palatial mansion in Houghton. It is the type of man who makes his living, not always in a bad way by speculating in a small way in properties who is hit by this tax. But that type of business does not go on to the same extent as the speculation we find in the share market. If these transactions have to be stopped, why does the Minister not stop the speculation which takes place on the share market? We know what happened recently on the share market in the case of Finbro. Why does the Minister not stop that?

Who is responsible for Finbro?

The Nationalists are responsible for that.

The point is that this tax reduced the quantity of land that came into the market and if we can put it in the terms of Adarkar in his “Theory of Monetary Policy. He says—

It is this point that is of very great importance, that this tax has retarded the flow of property into the market in comparison with the enormous flow of money into the market in South Africa, a flow for which nobody else is responsible but the Minister himself. I maintain therefore, that if this tax was not enforced the price of property would not have gone up to the extent it has gone up. It is only natural with the scarcity of property due to the fact that people would not sell their property and pay out two-thirds of the supposed profit, that that scarcity has gone to enhance prices. What is more, if property is subject to this duty, and if say property situated next to the house of the Minister of Finance, and if it was a similar house to his, and if that house was sold for say £5,000—or whatever it was worth, it would probably be nearer £50,000, I do not know ….

I do not happen to have a house.

Is that why the Minister brought in this tax? If that house was situated next to his house and it was sold for £5,000 and subject to tax, and the Minister’s house was not subject to tax, he could demand £5,000 and get £5,000, because it is this tax on property that brings the figure up so high ….

You talk about selling houses; it is not so easy, I tried last week.

The hon. member for Hospital (Mr. Barlow) has said that this tax was very successful in combating inflation.

I did not say it was very successful. I said it had a tendency.

I am sorry the hon. member has to water it down a little bit. In any case whatever the hon. member for Hospital has said I am dubious whether this tax on fixed property has been very successful in combating inflation. I have before me a very comprehensive work, written by three American authorities: “Taxing to Prevent Inflation”. They went very carefully and in great detail into all the different types of taxation applied in the United States of America, and the effect these taxes had in combating inflation, and they do not even mention this tax on land. I am not sure whether they have such a tax there or not, but if it was of any importance and in effect in America at all this comprehensive study would have included a reference to it. If this tax is of very little importance in a country like the United States of America, why should we suppose this tax has been so very successful in combating inflation in our country? The Minister came along the other day and in connection with this tax said if property subject to it was needed by a local authority, the Minister would allow a reduction of 6 per cent. per annum, tax free, on such property. With all due respect to the Minister I think honestly such a suggestion is an insult to the intelligence of the South African public because it is generally known all over the country, and the figures are published by the Government itself, and published daily in the newspapers, that the depreciation of our currency has been at a higher rate than 6 per cent. per annum. In other words, if this property is allowed to be sold today and 6 per cent. is allowed, you are still robbing that man, because even with the 6 per cent. over a period of five years, that man is not capable of buying that property back at that figure because the value of his money has depreciated. I cannot help thinking that that little concession will bring no tranquillity into the troubled minds of the South African property owners, and the unfortunate type of property owners who are subject to this tax. I think it is nothing but a further danger sign on the horizon of the stormy sea of the structure of South African taxation. I say “stormy sea” because when we talk about the taxation structure in South Africa the Government is all at sea. This is supposed to be a wartime tax, but though the war is nearly over the Minister is continuing this tax. What is more, the Minister said in this House the other day he meant to continue this tax for another 50 years, and all properties being sold through that period when the tax is in force will be subject to that taxation over and over. I cannot see any justification whatever why such discrimination should continually be drawn. Surely this is not a case of the sins of the fathers; is it such a sin to have bought a property during the war? I know of an instance where a financial man, a man with a thorough economic training, discussed with me that they are prepared to pay enormous prices for a house simply because he and his wife and family must get accommodation somewhere.

Send him round to me.

Even if they do buy the house from the hon. member for Hospital that house will still be subject to that unfair duty.

If he buys it at a high price he is not likely to sell it at a profit.

If we get an after war depression, and I feel sure unless we take a more constructive view and change our whole system of taxation, unless we change our whole economic system, our outlook and plans for the future, we will be faced after this war with depression in the same way as it arose in the past. If such a depression comes along the Minister of Finance will not collect one penny on these houses. Yet on account of this tax people were forced to buy these expensive properties and the working men will have to sell their houses at a loss. The Minister of Finance will not, however, make a refund.

You will be in power, you say, so you can put it right.

As I have just said, these houses that have been bought during the war period and are being bought now, even if they have been bought from speculators, are bound to have been bought at high prices, and why should they remain subject to duty? The Minister says, well, probably no profit will be made on it. But the civil servant and the railway worker who were forced to pay these high prices. They have been taxed all the time and will probably be taxed for the next 10 or 20 years, and if after a long struggle they can make £300 profit on a £3,000 house the Minister will step in and grab his share. I ask, is there any justification whatever for the continuance of this tax? What is more, the speculator of property, the type of man the Minister seems to aim at, might be selling ground on which the rate of tax is 13s. 4d. in the £ in respect of the supposed profit—I say “supposed” because in land dealings there are expenses that never will be accepted by the Minister’s Department—and the profit may really exceed the 13s. 4d. though I know that would not be accepted by the Minister’s Department. The Minister smiles; I do not know whether it is a smile of satisfaction or dissatisfaction; but this is a fact. We have instances where a man sells two or three properties and he is classified as a speculator and if he happens to have an income of over £1,500 per annum—the larger percentage of people have not incomes of over £1,500 a year—not only has he to pay the 13s. 4d. tax in regard to the supposed profit, but he has another 5s. in the £ to pay on the balance. So he is paying a tax of 18s. 4d. in the £.

And the 1s. 8d. is also taxed.

Yes, he has to pay the ordinary tax on the 1s. 8d. and the other tax is paid as well. In addition to all that the Minister takes 4 per cent. transfer duty on the whole of the transaction. On can find instances where this tax is over 100 per cent. If that is the idea of the Minister to stop speculation in the land, if it is his idea to stop inflation, the defence the Minister has as a rule put up in regard to this tax, I say what justification is there for having a tax like this that can amount to 100 per cent. while the excess profits duty is only 15s. in the £. A man can speculate on anything he likes but he does not pay more than 15s. excess profits duty plus ordinary income tax, but the unfortunate man dealing in property will at least pay 18s. 4d. plus 4 per cent. transfer duty on the whole transaction in comparison with the 15s. in the £ paid by the other type of speculator. In other words, inequality and inequality and just once more inequality of taxation. This tax, unsound as it is in every respect, hits at the very foundation of a system of sound taxation, and therefore I say the time is overdue when it should be removed. What is more, the excess profits duty starts at only £1,500; a man who has had no pre-war basic salary is allowed to make £1,500 before he is subject to this excess profits duty tax. This tax on fixed property, however, starts on the first £; if a man makes £1 profit the Minister takes 13s. 4d. Is there any justification for keeping a tax which is so unequal and which to my mind is so unsound? Where is the equality and where is the justice? To my mind this tax does nothing more than hit up the small man. It hits the teacher, the working man the civil servant, the type of man of whom there are thousands in my constituency. They say: What can we do, we have been transferred to the Cape and if we sell our house we may get a few pounds profit and the Government is going to take most of it; then if we have a home elsewhere we have to pay this very high price for it. In other words, this tax aims at ruining the small man, the worker. The Minister says, yes, but it can be reviewed. The hon. member for Sunnyside (Mr. Pocock) said, however there is no review. A year ago I suggested abolishing this tax and putting a higher transfer duty on all property to maintain the revenue. I do not know whether it is robbing Peter to pay Paul, or robbing Paul to pay Peter, but robbery it still appears to me to be. There is no doubt that this tax has not yielded anywhere near the revenue the Minister thought it would yield. This tax has not been an economic tax at all, and if the Minister today goes further and increases the transfer duty on all land deals, if necessary increases the transfer duty on all land speculations during the war, I am confident—and it is easy to calculate because the Minister knows of all transactions in land—that it will bring a far greater income than this tax has done.

I do not want to add any new ideas in regard to taxes; I think the time is long past for that. We know that excess profits duty has been variously classified by some as unfair and unnecessary and, by others as fair and essential. If hon. members will turn to page 606 they will see under heading 2, paragraph 1, something that has caused me some misgiving. The Minister of Finance has on one or two occasions stated that the excess profits duty will be removed on the cessation of hostilities, and therefore it ill becomes any of us here to spend much time in discussing the so-called justice or inequality of this tax, because we assume and hope it will soon disappear. There is, however a principle involved here which I would like to bring to the notice of the hon. Minister of Finance. We medical men, as well as dentists, teachers and other professional people are correctly classified as tradesmen. When we know that carpentering is a trade we are honoured because ….

Some of us are carpenters, are you not?

I would like to explain to the Minister of Finance the implication of this addition. You find in the professions of laws, or dentistry, or medicine, people who have reached the higher rungs of the ladder are doing an enormous amount of work pro deo, and also filling posts in hospitals, or teaching at the universities, for which they get a very small stipend. I have no hesitation in saying that the professions of law and medicine view this addition with alarm, or rather with disappointment because we look upon it as somewhat grabbing, if I may use a mild word. To clarify the point I would like to quote a specific case. At the Groote Schuur Hospital there are physicians, surgeons and ophthalmic surgeons who spend the whole morning or the whole afternoon teaching and examining students, assisting students and operating on patients, and for that the university, by way of a gesture, give a salary of £100 a year. One hundred pounds a year for all that work, of course, is no salary. It is merely the honour of being able to be of assistance to one’s fellow men. You must realise that in filling such a position a surgeon, for instance, uses an enormous amount of time and income in the performance of his duties. He has had to pay excess profits duty on that stipend in the past, and he continues to pay it with equanimity. The medical profession has not given much trouble to the Department of Finance. There may be a few exceptions but you will find such in every profession. The medical profession and the legal profession return £3,000.000 in taxable income. What is £100? The sacrifice the professional man makes is great. The pleasure he gets in helping his fellow man is also great. Now the Minister of Finance comes and suggests that the medical man who is sacrificing his time and giving his skill in this way—because he would not have the post if he had not the skill—must also pay the penalty for having that £100 added to his income, and it will be subject to excess profits duty. The money counts for nothing, but when the £100 is roped in for excess profits duty I would like to take the opportunity of telling the hon. House that the legal, medical and other professions view this with dissatisfaction. It appears that the powers that be are not grateful for the various services performed in this way in the various hospitals throughout the country, and the Minister of Finance is not increasing the regard that these three important professions have for him and his policy.

I am sorry the hon. member for Gezina (Dr. Swanepoel) is not in his seat at the moment, because he has told the House we should realise our gold in a free market. He suggested we should sell it to India and gain the benefit of the higher price that rupees would yield us. I want to ask him just one question. What does the hon. member for Gezina propose to do with the proceeds of these gold sales? The gold is sent to India and exchanged for what—rupees, but what is to be done with the rupees?

Sell it for sterling then convert it back at the same value.

That is what hon. members seem to forget, that this is a haphazard business taking advantage of fortuitous circumstances that may be existing today to realise gold in this manner. Those circumstances are fortuitous nevertheless and the time is coming when they will disappear, and I say that the policy of this country should aim at achieving stability for what is the most important industry in South Africa without exception, and that policy should not be upset by following the procedure suggested by the hon. member opposite. The Minister recently gave details in answer to a question by me of an arrangement made with the Bank of England whereunder we participated in the benefit from the sale of gold, but that was in respect of payment for goods. We got goods back in return for the gold—not rupees. That was a sound transaction. That has now come to an end. This question of the realisation of gold goes much deeper than the points made by the members opposite. I want to deal further with the question of gold mining. It is gratifying to note the steps that are being taken today to give some consideration to the great mining industry.

They get all the consideration.

It has been most gratifying to listen to some hon. members suggesting that for various reasons taxation of the mines should be reduced.

Reduced?

Well, what industry in this country is paying overall on its profit taxation of 15s. in the £, not excess profits duty derived as a result of the war, but on a declining overall profit? I go further and ask what industry can continue to maintain the economy of a country on the basis of paying 15s. in the £ as taxation? The goose that lays the golden egg is steadily being strangled. The writing on the wall is clear.

Where do you get your 15s.?

It is well known that the taxation of the mines today is in the neighbourhood of 75 per cent. That has been stated by the hon. Minister in this House. It is a well accepted fact that has been known for the last three years. The great distinction between the special contribution made by the mines and excess profits duty is this, that the excess profits duty is based upon the increased profits which have accrued during the war—not necessarily from war circumstances—while the special contributions from the mines is levied on inflated profit, not on taxable profit. It is time this matter was given consideration. If hon. members have had an opportunity of referring to the report by the committee on deep level mining, they should look at the plan marked “A” held in my hand and take note of the enormous area of the wealthiest goldfield in the world which has been worked out. It is shown shaded on the plan. That speaks volumes. Mines are presently being closed down. Why? Because gold-bearing ore becomes exhausted. It does not grow again like a fresh crop of mealies. Once a ton of reef is removed from the earth it has gone for good.

It leaves the country poorer.

It is going to leave us poorer yet if we do not follow a more enlightened policy. A more enlightened policy and one that is calculated to prolong the life of the mines as much as possible would be based on the realised fact that the more you can reduce working costs the greater is the quantity of ore that can be brought into the field of payability. The hon. member for Waterberg (Mr. J. G. Strydom) referred earlier today to the fact that the price of gold since 1933 has doubled. He entirely overlooks the fact that in the process the grade of ore milled has been reduced very substantially. There has been a vast extension of gold mining in this country, and the result is that in every town you go to throughout South Africa you will see the fruits of that expansion of the industry which came about in 1933. It is not only a question of the price of gold but a question of the economy of gold mining, which is little understood by many hon. members. It behoves us as legislators to make it possible for the mining engineer to use his ability and to enable him to mine the maximum tonnage of ore economically possible in this country. That should be our aim in essence, and not to take as much as possible while the going is good. The steps the Minister proposes to take are desirable steps. He proposes to set up a departmental committee which will function along the lines of the 1935 Committee, and I say the 1935 Committee made history. It solved what was then an apparently insoluable problem, and arrived at a very good basis of taxation for the mines.

[Inaudible.]

Be that as it may it is most encouraging to me to know that the whole top-heavy system of taxation is going to be overhauled by this committee, and it is my hope that the committee will be as successful as was the committee of 1935. I remember well in the maiden speech made by me in this House in 1940 ….

Oh, cut that out. You do not remember your maiden speech.

…. I said that the achievements of that committee constituted a well-marked national highway in this country and I trusted that the Minister would keep to and not deviate from that highway. Well, it is time that this country and this Parliament should take a view of mining in its national and wide sense. The hon. member for South Rand (Mr. Christie) today made a plea for a reduction of taxation and added that part of it should go to increase the Wages of the miners. There will be members in sympathy with him on that point and those who may hold different views, but one pleasing thing is that he went on to refer to the bigger aspect, of the developments in the Free State field, and he quoted from what an eminent mining authority in this country said would be required in that regard. I submit this is the aspect from which this House should view the matter, and the time has come that a policy must be comprehensively viewed and the subject tackled in that light. I want to ask the Minister this. No reference has been made this year to the aspect, but he will recall that last year, as a temporary measure for one year, the gold realisation charge, which had accrued to the Treasury and which now amounted to probably £10,000,000, was applied in respect of the year just past to meet the increased wages payable to mine natives. I am interested and I think the country is interested to know what the policy is for the ensuing year. The Minister has made no utterance on this aspect and I am hoping that he will deal with this matter in a more permanent way because the arrangement last year was temporary and purely an expedient. I think in large measure it lacked soundness. It was a rush decision taken to meet the situation.

I agree that it was a rash measure.

I hope the Minister will make a statement on that aspect. I mentioned just now that the direct taxation on gold mining is 15s. in the £ on the profits. But the taxes on the mines do not really end there because the indirect imposts are very severe indeed. One has only to go back to the Low Grade Ore Commission, which sat 14 or 15 years ago, and to read the report in which they estimated that the indirect taxation amounted to no less than 6s. 8d. on every ton milled and I do not think it would be unreasonable to say at this stage that the figure has increased. One of the latest problems we have is this that added to the present indirect burden upon the mines we have the Minister of Transport increasing railway tariffs by 10 per cent. That is adding appreciably to the burden of the mines because all mining traffic is high rated traffic, and 10 per cent. on high rates amounts to quite a lot in the end. If we could overcome these indirect levies or reduce them appreciably, it would be possible to bring about payability of a large tonnage, which has gone beyond payability because of the increase in costs, which have occurred during the last few years. We must face these facts. If we face them in the right way it will be a credit to the country and lead to a prolonging of the industry and to a sound economic situation of the country. I would now like to turn to the question of taxation in its general sense. I was one who was not disappointed with the Minister’s Budget this year. That may sound strange pouring from my lips, because I think I was a critic of some of the inequitable taxation from the beginning. The Minister last year made it clear that he had no intention of revising his taxation at the present time, but had every desire to go into the matter carefully and as soon as opportunity came after the end of the war to bring about substantial revision. Well the Minister has kept his word to us in that respect. He has told the House what he has done up to the present and of the special committee, which was set up last year at his invitation and functioned during the recess. I realise how difficult it is under the stress of war and with the tremendous need for money to make any drastic changes at this stage. I do say this, that I would have liked to have seen some changes come about already, but I am not unappreciative of the Minister’s difficulties. I do want to say this, that we are now entering a stage when some really serious attempt should be made to bring about a change in our taxation machinery in the coming year. I shall be bitterly disappointed if in one year’s time the Budget does not introduce some very wide and drastic changes in the present system of taxation. It is obvious that the war has now reached that stage when some big changes will be possible during the next 12 months. There may be a difference of opinion on the point, but if one views what has transpired in England recently, and the words uttered by the Chancellor of the Exchequer, it is not unreasonable to suggest to the Minister that the same words could well apply here. In considering this subject there are certain vital issues which I would like to see changed. We have heard a good deal of some of these aspects. There is a tendency, with the lapse of time, to forget that the present taxation, which is retained in toto, still contains anomalies to which such strong objection was taken in the past. Little has been done to remove any of these anomalies. I want to make it clear, as I have done on previous occasions I think, that my criticism of taxation is not in respect of the amount it is designed to yield for war purposes. My criticism is confined solely to the extraordinary complexity of the system we have in force here and to the grave inequities which that complex system produces. My criticism is confined to this aspect. A good deal has been said about the E.P.D. today. We have heard much on that point. There are, apart from the rate of taxation, several anomalies which have existed, anomalies which were pointed out to the Minister years ago and which still stand. The Minister knows all these and I do not want to repeat them. There is one anomaly, however, which has manifested itself recently and I wish to draw his attention to it. Under the excess profits tax if a loss is made in any year, a refund is made from previous excess profits duty paid by a company. I think my point is clear. Now, the amount refunded is refunded in a subsequent year of taxation. I think that, as taxation is taken in annual compartments, it is only fair that, if a loss is sustained in a certain year, and it is of course calculated at the same time the credit for the refund should be taken then, although the physical refund may be made subsequently. The reason is quite clear. A firm makes a loss in a previous year, a private company in which the profits are apportioned between the shareholders. The refund is made this year. The profits have been recovered. The firm this year is liable to a little excess profits tax. I have a particular case in mind. They are liable to a little excess profits tax this year but the shareholders have in addition been apportioned the refund of the excess profits duty which should have been refunded two years ago. The effect upon the current year’s tax is obvious when regard is had to the graduated rates of normal and super tax. That refund should have been taken into account in the year in which the loss was made. I think that is the fair thing and I think it is a point which could well be given effect to. The Minister made a point with regard to the sound financial position of companies. He has quoted figures giving the registration of new companies to support his contention that the position is not as bad as it is represented to be. No one can deny the figures, but the question is this, that the taxation of these newer companies has been very heavy indeed, far heavier than ever it was in the last war, so that their reserves are resultantly small and they are facing heavy expenditure when the war is over. What is going to happen to these firms in the post-war years when conditions cannot continue on the same level they are on today, it spite of what the hon. member for Hillbrow (Dr. Friedman) has to say? I cannot share his idea of a post-war Utopia. In these post-war years it is obvious that a stage must be reached when the inflationary effect of the war must be reversed and deflation must set in. If that can be controverted I will be surprised. What will happen when the high level of prices falls to the more average normal levels? There must be dislocation. It is inevitable. In the last war many firms could accumulate a good deal of their profit and it did not take them long after the war—in 1920 and 1921—until the whole of the accumulated profit disappeared. They were not mushroom industries either but firms of long standing.

You had no Government action to counteract it then.

Government action can never counteract it. It cannot keep up prices for long. No Government can do it, except temporarily. It is a question of reserves. The British system of E.P.D. was to set aside 20 per cent. as compulsory savings which will be available to those firms after the war, and 20 per cent. per annum has accumulated to quite a sum of money now. It is a nest-egg which British firms will have to meet their postwar troubles with. We do not have that. The Minister may say that our tax is at a lower rate, and that is so, but it must not be overlooked that 15s. in the £ is not the only tax on excess profit. The remaining 5s. is also subject to all sorts of taxes. That is a factor which I want to put to the Minister in controvertion of his assertion that the companies’ registration figure shows that the E.P.D. is not having a restrictive effect. New companies know that they are not likely to be subject to the E.P.D. at any rate not for a long time. When the war is over that tax will go. But there is one tax which has not been referred to here today the trade profits special levy. This is a tax, not upon excess profits of the war, but a tax upon pre-war income, the standard of pre-war income, of individuals and companies. Sir, it is payable even when the profits of a company fall below its pre-war standard. This tax is still payable. It is highly discriminatory and has a retrospective effect by reason of the fact that it is reckoned on the pre-war standard of income. It is based upon no sound principle and I submit it is one of the taxes which should go as soon as possible. In the case of companies, where this tax is levied upon a company, at source, an aspect which the Minister has indicated he wants to remove from our taxing machinery, the fact that it is levied at source is a most objectionable feature, especially upon a private company, where the taxable profit is apportioned. Every shareholder, large or small, whether rich or poor, even widows, has to pay his or her share of the tax on the company at the flat average rate, which is 6s. 8d. in the £. 6s. 8d. in the £ is paid on a portion of the profit irrespective of the income of the individual taxpayer. This tax takes no account of the individual’s income. He pays his share of it whether he comes within the tax range or not. The smaller the income the harder the tax bears, and conversely, the larger the income the easier it bears upon the individual. It is grossly unfair. This tax is paid by individuals on their small incomes, individuals who in the normal way would not be liable to any tax, who fall below the income level for taxation, but nevertheless pay by virtue of their being shareholders in the company. The company pays it on their behalves, because in the final analysis that is the way any tax is paid. Furthermore it takes no account of the individual’s capital investment, of the amount he has invested in shares. It is quite unsound in this respect, because it is based upon the capital employed in the business. Whether the shareholder has paid £1 or £15 for a share, the taxation is levied on the capital employed in the business and no account is taken of the individual’s actual capital investment; and I submit that that is an inequity because it upsets the whole of the pre-war economy, the whole of the basis upon which shares were bought and sold in the past. This tax is one which cannot go too soon because of its unsoundness. It is a tax producing well over £5,000,000 now and the Minister will ask how he can make it good, but I submit it is only fair and right that the tax should be recovered from the back of the broad body of the taxpayers, and not from a small select number, especially as it bears upon the progressive, successful business, and it does not bear upon the inefficient business. It is, in other words, a premium on inefficiency. Then there is the Companies’ Tax, the normal tax on companies. I hope the Minister will consider abolishing the distinction between a public and a private company and treat companies as companies, and in taxing the profits of companies he will tax the dividends paid in the hands of the recipient shareholders and thereby divert as much as possible and all of the distributed income to the individual and tax it in the hands of the individual according to the individual’s income. In the hands of the company he will tax the proportion of the profit which the company has not distributed but retained. The Minister can also bring about an improvement in the taxing machinery, in the mathematical calculation of normal and super tax rates and I hope he will abandon the policy of graduated rates, the maximum rate of which is applied to the whole taxable income, and resort to some more equitable method, so that the anomaly to which I referred in the past and which was referred to by the hon. member for Vasco (Mr. Mushet) today will disappear. I am not concerned whether income is larger or small, but I am concerned that as income rises so the amount of tax should increase in fair proportion. It is unfair to apply a high rate of tax to the whole amount of income. It produces the situation which we have where over a certain scale every additional pound of income is taxed at more than £1. It is indicative of a retrogressive method of computing taxation. With regard to the amendment of the hon. member for George (Mr. Werth) I dare say many will be in sympathy with it. I would be in sympathy with his amendment were it not for the fact that we are still fighting the war, and until this war is finished it is not fair to ask for this drastic revision. I think in the circumstances the amendment is untimely, but, having regard to the fact that in the mind of the hon. member for George the war has practically ended in South Africa, I can understand him bringing forward such an amendment. For our part, those who have supported the war effort right through, we can only say that the amendment is impracticable today. It is right, therefore, to oppose the amendment.

I sat and listened to the hon. member for Houghton (Mr. Bell) very carefully. Automatically the thought entered my mind that he is of course one of the champions of the mines.

Of the Corner House.

Yes, of the Corner House.

And what about the member for South Rand (Mr. Christie) ?

He is one of those people who come here and cry about how great the difficulties of the mines are; how poor some of them are and what heavy taxes they have to pay. That reminds me of the English saying: “Methinks thou protesteth too much.” He lays far too much stress on the position in which the so-called poor mines are. I almost wept while I sat here and listened to what high taxes they must pay and what difficulties they have. The hon. member told us here: “See what deep holes they have to make to take out the gold.” Yes, that is so, but if there is no longer a sixpence worth of gold in those holes, those mining magnates go away; they close up those mines; they do not even take the trouble to fill up those holes. They have the money which they took out of it, and the people of South Àfrica are left with a hole. He does not tell us that. The gold mines and the mining magnates have ruled the Government of our country long enough; they have ruled the Government of the country more than any other section of the population. They were also the cause of most of the troubles we had in the country.

Not more than the wine farmers.

I will come to the wine industry and I will prove that the wine industry paid more war taxes than the gold mines.

That is nonsense.

That hon. member thinks that he has all the knowledge in the world. But I doubt whether he knows how much excise we pay on a leaguer, how much the farmer gets per leaguer and what the Government gets. If he knows that he would not be so rowdy as regards the gold mines. As regards the gold mines I wish to point out that the value of gold has doubled but the gold mines contributed nothing towards doubling that value. It was the result of a stroke of the pen by the Minister of Finance when we left the gold standard that the price of gold rose so much. Did they pay their people more after that, or did they reduce wages?

They paid the people more.

They did not pay their employees a sixpence more; on the contrary, they reduced wages.

What about the indirect benefits?

They reduced the number of natives working under a contractor, and they did things which resulted in decreased wages.

Who says so?

That shows how little the hon. member realises what he is talking about. As far as the gold mines are concerned the position is quite clear. I challenge the Minister to prove to me that what I am about to say is wrong. I say that the wine farmers are in a position where their crops do not bring in more than one or two million pounds, while the income of the gold mines is more than a hundred million pounds; and I invite the Minister to give his friends opposite the figures of the taxes due to the war. Let him take the proceeds from excise in 1939 when the war broke out, and then take the proceeds of excise for the last year, and you will see that the increase on that is more than the war taxes paid by the gold mines. Do not include contracts of hire and such-like matters. Take purely their taxes paid as a result of the war, and I challenge the Minister of Finance to prove to me by means of figures that this is not so. That hon. member is terribly concerned about the gold mines, and I can understand it. They are always so anxious to tell us about the position of the weak and poor mines. They do not mention the rich mines, but they use the low grade mines as a threat against us, saying that those mines will close down if taxes are not reduced. Let them close down, and we will work them.

Is that the policy of the Nationalist Party?

I am speaking for myself. We have not discussed the matter, but I take it that my Party will agree with me when I say that we will not permit the mines to threaten us as they did in the past, because that is a scandalous state of affairs. If they want to close mines down, let them do so, and we will work those mines under control of the State.

Look after your grapes and we will look after the mines.

Yes, I know that hon. member will look after the mines. But he wants me and others to pay to see the war through although he refuses on behalf of the mines to do his share. He comes and cries here about the contribution of the gold mines. I say that as far as the gold mines are concerned the nation should have a proper share of the gold taken out. I am practically in favour of the State assuming greater control, so that we can prevent those frauds committed by the mines to evade taxation. We are not afraid of the threat of the gold mines that they will close down, because if those mines pay, we will work them; and if they do not pay, why are they being worked? Why should we give the rich mines assistance and allowances because there are a few which are not payable? Rather close them down and take from the rich mines what is due to the country. That is the position. We in this country are tired of being dictated to by the mines. This Government stands under the control of the mines. They use the chairman of the Chamber of Mines for all sorts of things, for aviation conferences and other things. Are we not yet sufficiently under the influence of the mines; must they also have authority there? I will not allow myself to be frightened by the mines. I say that they do not contribute as much as they should, and I say that Providence has given the benefits of gold and diamonds to our nation, to profit by them, and not for the benefit of a few people. Not only do they try to evade taxation which they ought to pay, but they do not pay their employees properly. Last year we had the scandalous state of affairs that the Government had to pay the mines a subsidy to enable them to pay higher wages to the natives. They refused to pay and got a subsidy from the Government with which to pay portion of the wages, although they are well able to pay. The miners want a decent increase of wages. The mines say they cannot give it. They give £100,000 to build houses for these people. There are 18,000 mineworkers. How many houses of £1,500 each can one build for these people? I say that until the mines contribute as they ought to contribute to the income of the country, and the country receives the benefit of the mines, I will rise and protest. I also wish to raise another matter, also partially affecting the gold mines although other companies also sell shares. It is proposed here to pay a tax on transactions in the Stock Exchange in the form of stamp duties. And do you know what tax they are levying on it? Other people, apart from me, say that the evils of speculation arise from the stock market. Now a tax is levied. How much is it? 5s. in the £100 in stamp duties. We have paid that on the transfer of ground ever since 1911. That is all we get from the stock market transactions. The Act of 1911 laid down stamp duties. If the Minister wants income from stamp duties, he can get it. I shall have no objection to it. Let him take the schedule and go through it and make changes. But what is 5s. in £100 on share transactions? There will be people who lose money, but there are people who make thousands of pounds in shares and do not pay taxes. It is not income for taxation purposes, but increase of capital. They do not pay taxes on it. But if I buy a piece of ground and am fortunate enough to make a few hundred pounds out of it, or a few thousand pounds, I must pay 13s. 4d. in the £ in taxes, not 5s. in £100. When the Minister levied this tax, I think in 1942, he stated that it was essential to stop speculation in land. I have here the report of his Department and the figures which indicate what took place. In 1933-’34 there were 30,152 transactions.

Which schedule is that?

Schedule 15 on page 37, “Transfer Duties”. There were 30,152 transactions, and the value was £24,381,607. In 1939-’40, two years before the tax was levied, there were 45,000 transactions and the amount concerned was £37,000,000. In 1940-’41, there were 52,000 transactions, and by then the value of ground had risen to £55,543,744. In 1942-’43, when the tax was in full force, there were already 55,000 transactions and the amount had risen to £67,000,000. In 1943-’44 it rose to £101,000,000. The tax did not help at all. Now the Minister will say: Yes, but the value of ground rose. I just want to tell the Minister that the number of transactions was 71,344 in comparison with 52,629 in 1941-’42. The value of the ground is thus not reflected in these figures. In other words, the tax on fixed property did nothing to counteract speculation.

That is just the opposite of what the hon. member for Gezina (Dr. Swanepoel) said.

I cannot help that. That is the latest report of the Commissioner of Inland Revenue which appeared recently.

I did not say that at all.

There your Party is divided again.

That hon. member looks through all kinds of spectacles and sees all kinds of things. I quote the figures. I do not think the hon. member for Gezina said that. The figures clearly prove that the tax did not help a jot to prevent speculation. The number of transactions rose ever since the tax was levied from 52,000 to 71,000 and the monetary value rose from £33,000,000 to £101,000,000. Now the hon. member must not say that it stops speculation. On the contrary, people were put in the position that they perhaps had to buy a farm for their sons at a high price. They were forced to pay the price because they were in need and the price was chased up by the tax. If the Minister wants to levy a tax he must say that it is a tax, and if it is a tax we must submit ourselves to it or take the consequences. He of course has the right to say what he will tax and what not. But I want to tell him that if he wants to levy a tax he can obtain much more from Stamp Duties on shares. Since 1911 the value of money has decreased. Where at that time there was a levy of 1s. he can now levy 10s. on broker’s notes. Why must the rich people and the mines always receive preference? People speculating on the Stock Exchange are rich. One cannot speculate if one cannot afford to lose, and if they are rich they are able to pay. In any case, make it £1 per £100 instead of 5s. Then it will be a tax. The Minister should increase stamp duties on such transactions. There are stamp duties which the banks can pay but do not pay and there are stamp duties which rich people can pay. Let that tax be levied instead of hindering the development of the country by taxes. There is no doubt about it that the super tax retarded industrial development. The progress made during the war was not what it should have been. Everybody agrees on that. And apart from the amount of the tax itself, the publicity in connection with it discouraged people from putting money into industry. It is true that there was difficulty in obtaining machinery, but there were many industries which could have been developed. The industries should be enabled to expand so as to be able to continue after the war. The Minister can get much more from stamp duties and it will be a more healthy tax. Do not again exclude the rich people and tax the poor. It is clear that the Minister is afraid to tax the Stock Exchange because the taxes on all s des, and even taxes industries which are worth much more to us than the Stock Exchange. Tax those people who can pay for the war. It is their war.

What about losses?

Have you never had losses in selling ground you have bought? We always hear about the losses suffered by people, but never about their gains. Tax the rich people. Poor people ought not to speculate. It will be a good thing to discourage them from speculating. I can mention a few persons in Cape Town who started with a few thousand pounds and today are worth £250,000.

Where are they?

I will not tell the hon. member that, because he may put it in his paper. But I know of a few. I know they are also people who lost money, but one who knows what he is doing will not lose, and the rich people can pay the stamp duties. The tax of 5s. in the £100 is so ridiculously small, that I do not consider it necessary to say more about it.

In approaching the matter of taxation one cannot very well ignore the mines. We have heard rather divergent views as to what has happened to them in regard to taxation. Today for the first time in the history of this House a member of the Labour Party rose to his feet and suggested that the Minister should consider the lightening of the taxation on the gold mines; and he went on to say he felt that was necessary because in the present position the gold mines were unable to meet the demands of employees apart from whether they are just or not—because taxation amounted to too much. It seems we all agree that the division of wealth should be spread over the greatest possible area, but unfortunately one has to say in regard to the gold mines that proper distribution does not flow naturally and easily from the fact of gold mining. The conditions that have been built up for the white worker on the mines, whatever may be the case of the poorly-paid native workers on the mines, have not come naturally and easily because of the fact that gold mining is a very profitable occupation. It has only come because the people who have obtained those conditions have insisted from time to time in their betterment until they have reached what is supposed to be a fairly high level of existence. We would like to see that the mines are going to take the attitude that they are prepared to play their proper part in the national economy. It is apparent that a conflict exists here in the minds of different people in regard to gold mining, and at times so obfuscates their approach to the matter as to make them say ridiculous things, and some are even prepared to kill the goose that lays the golden eggs. We in the Labour Party have never taken up an unreasonable attitude. Whatever may have been done by men in the heat of the moment when the battle was on and when tempers were frayed, whatever may have been said in the way of intemperate speech, we have, as a Political Group, always held that the reasonable approach to the matter is the best approach and the one that will tend to a proper end. I think the reasonable approach to gold mining, as a taxing proposition, has never been taken, for the simple reason that gold mining has never been recognised as an entity, as an industry, except for the purposes of self-defence. When it comes to self-defence you find all the separate companies united and you are up against their serried ranks, and their attitude as a whole, when the demand is for something from the industry, is that the ability of the industry to pay is according to the strength of the weakest company. It is not possible at this time to quote figures in connection with the “weakest company” but one is sure that the history of the weakest company in gold mining will show that it has in its lifetime distributed to the people who invested their money in that company, many times over, the capital sum invested. That is beyond doubt. I maintain it is reasonable, even at this late hour—I think not too late an hour, in view of the fact we are being told that even America is coming into the field of gold mining in the particular area mentioned by the hon. member for South Rand (Mr. Christie)—I say it is a reasonable proposition that in view of our common difficulties the industry should be treated as an entity instead of as a series of companies which can nullify any attempts to extract from the industry the proper contribution to the country’s economy. I do not think it is beyond possibility for reasonable men to get together and I hope the Minister of Finance will implement the idea, and appreciate, in face of the issues we are confronted with today, that it is not only right but proper in the interests of South Africa, that this should be done. Then we could assess scientifically what could be taken out of the ground, and in what measure it should be taken out of the ground and disposed of. In connection with gold mining I have, in common with other members of Parliament, received a document entitled “Subsidies and cost of living”.

The writer is evidently a free trader. He is opposed to the suggestion that revenue should be derived by protective duties on goods imported into the country. His plea for the gold mines consists in this. He says, and says rightly, that the gold mines have definitely raised the standard of living in South Africa—we grant that—and he says that gold mining is the pedestal on which the prosperity of the country was built; again we agree. Then he says certain people want to knock away the pedestal. There we agree or not, according to our point of view. I do not know that we could find anybody who would deliberately seek to close down the industry; but the writer says there are such people, and then he goes on to say there are certain clever (using the term in a derogatory way) people who believe that we are approaching the end of profitable gold mining, and therefore no time should be lost in launching on a general programme of industrialisation to take its place. But the extraordinary thing is this, that one of the “clever” people who must be included in the list happens to be the late Dr. Hans Pirow. I have heard the late Dr. Hans Pirow say that definitely in his opinion production in the gold mining industry reached its peak in 1944 and from 1944 it would definitely be on the downgrade. But it would seem that indications are that he was wrong. We know that Sir Lionel Phillips was wrong in 1921 when he told the country that that very thing was happening as from then. We know what progress has occurred since 1921 and how much in taxation the country has been able to derive from the gold mines up to the present day. Taxation has got to come from somewhere and we have the position that people no longer believe in their hearts that gold has a special claim to its exemption from a share in service in connection with the conditions the war has created. These conditions will have to be met in peacetime, and we all agree that our revenue must be equal to the job of reconstruction. In answering the question as to whether it costs more to knock down or to build up, one would be tempted to say it would cost more to build up; but that does not seem to be the correct answer in the face of our war experience. It would seem to have cost more to knock down in war than it will ever cost to rebuild in the countries concerned in the present war. If that is so, if by intelligent application to construction it can be demonstrated that construction is cheaper than war, we need not face the future with any preconceived idea that when we set about building up we are going to be impoverished in the process. The other point of view is the more reasonable. If we proceed to build up it will not cost more than we can afford, and what we are doing in the way of useful work will be productive and will also yield money by taxation. In all the talk about taxation apparently again most of us are agreed about the volume of money we should spend. The exception is the hon. member for Houghton (Mr. Bell). He is an anachronism. I cannot imagine how a young man can have survived to the present day with the ideas he holds. He must be impervious to all ideas of progress. He wants to maintain the position that a group of people shall run the Government as against the Government running the country. I am afraid it will need a great shock to shake him out of it. The hon. member for Vasco (Mr. Mushet) showed a great humanness in discussing the work that will have to be done with our taxation. He agrees there is a human problem to solve, but he brought in the old shibboleth that when we talk about what we want, how often do we say: Can we afford to get what we want? That is where the hon. member for Vasco went down badly. He asks whether we can afford it. We can afford it, and we must afford it, and a proper principle in taxation is this — however much it seems to hurt some people — the proper principle in taxation is to take money from the place where money is. You cannot take money from people who have not got money, and if some people have got the idea that it is desirable to store up large sums of money so that they may be able to say, “I am worth £1.000 000, £2.000,000 or £3 000,000”, and if they get a kick out of accumulating wealth, they should not feel hurt if the State should say to them when it wants money: “We want to get a kick out of that money too”, and that the State should take a portion of that money. We look overseas and we find that in the older states everybody is taxed. Everybody who gets monev has got to pay a certain amount to the State. In this country it is not so. Many people get monev in this country and they pay no money in direct taxation to the State. But that, by the way does rot mean that they do not contribute to the income of the country. It is here that the conflict between the protectionist and the freetrader comes in because in the matter of buying things everyone in this country has to pay through the nose more often than not for the things he buys. So unfortunately the poorest people do not know what they are contributing to the State. They are raving all the time but they do not know what they are paving. No State, however, has arrived at the point where having taken money directly from the people who have got it they can say that they have solved their money problems. Here we have another quotation taken from a booklet that was sent, to all members of Parliament. The writer quotes Burke who, as we all know, was a brilliant statesman. He says—

And then the writer of this booklet goes on to say—

The fact is that in one country in the world the solation is not still to seek. Russia has gone a long way towards finding a solution of that problem. Other countries have gone a lesser part of the way towards finding it. Australia is on the way. New Zealand is on the way, and we hope one day England will be on the way. England is not always as progressive as she should be, but I am hoping she will sit up and take notice eventually. We have not found it possible to solve our problems by merely taking money for the State from the person who has money. There is something more to be done, and it is wrapped up in that wisdom that must be exercised in investigating what the State can do safely and wisely, and what it can safely leave to the discretion of the individual. In South Africa — I say it without venom; I say it with no desire to score points against anyone — we have certainly fallen far short of that. We have been challenged in every issue where the State has to do a job by private enterprise warning the State that that is the way to ruin the country, and not only warning it but shaking its finger and saying: “Beware, lest you go too far, because really you are not the Government; we have something to say about it.” There has been built up in South Africa a power that has been able to exercise its might in the shaping of Government policy to the detriment of the people of the country, not so much to my detriment, because I have always been able to earn what is called a living, because I have been able to use my hands. I have never known hunger because I have been trained to work with my hands. But this power behind the throne in South Africa has worked to the detriment of the common people in South Africa in that it has produced too many poverty stricken people in this sunny and what can be fruitful land, merely because people get a kick out of accumulating money, and because they have exploited our queer ideas of finance. They have been able to dictate what should be done in the community in which they find themselves. Our taxation proposals must go on to the point where we do take money from the people who have money. And I am prepared to advocate in order to explore that possibility fully that any person earning money, be it ever so small an amount, shall pay at least a token contribution to the job the State is called upon to do. I do it because I know from my own experience amongst working people both here and in England that it does not matter how low the income, the working man does not mind paying if he feels that he is making a contribution to a definite and social end, and he will not hold an inquest. The people will make that contribution, so I would like to see that kind of thing brought into being, because then at least we can say to the people with a lot of money who claim that they are bearing too great a burden: “You think you are paying too much, but you are paying no more, comparatively, than others who earn very much less.” If we did that, we would arrive at the point where we would have to decide what else had to be done and I am sure that that would provoke us into taking very much more radical thought than we are taking today. We listened to people Expressing all sorts of thoughts which are really born of fear as to what the Government’s policy might be. May I just give one illustration of what I mean by State action and of what I think should be done. I want to refer to the Fisheries Bill that was passed last year. There you proposed to spend £1,000,000. To do what? To bring the fishing industry into proper, economic, healthy and sound condition. And how did you propose to do that? In the most stupid way possible. You said you would wait until private people subscribed that money in order to do the job. I want to say to the Minister that he could have taxed the Reserve Bank; he could have said to the Manager of the Reserve Bank: “I want £1,000,000; I want to build ships; I want to erect wharfs; I want to erect warehouses; I want to go in for research in order to put the fishing industry on a proper basis,” and then he could have built the ships and wharfs and the warehouses and he could have put the people into them. If he had done so, he would have got the fish, because no one would have chased the fish away, and as in the case of the gold mines, the product would have paid for all. Supposing it should be said: “But you are now creating money; what will happen to your currency arrangements?” All your experts agree that in order to start a job you ned money, and so you say to your" experts: “We think this job will cost £1,000,000; keep your eye on it and tell us at what point if any this credit would jeopardise our general monetary position.” We have the men that can do this. That is a too radical suggestion for our friend, the hon. member for Hospital (Mr. Barlow).

It is not radical; it is stupid.

No one takes notice of Barlow. The scripture has a saying: If a man compel you to go with him one mile, go with him twain. It is not the one mile we go that counts. In that one mile you may find out the intentions of the person, but it is in the second mile that we find out what his performance is likely to be and all of us are agreed that performance is what we want. We are all prepared to go the first mile but we are not prepared to go the second mile; then we begin to make excuses. I challenge the Minister again that he must be radical. He must give up his hide-bound orthodox consistency. He must be prepared to do something big if he is going to put South Africa on the map as a country which is going to recover from what has happened as a result of her participation in the war.

I am not going to give the House a lesson in economics nor am I going to give the House a lesson in high finance, but I would like to put the view of the ordinary man in the street in front of the House. I cannot agree with the amendment brought forward by the hon. member for George (Mr. Werth) who thinks that the time is now opportune for us to revise our taxation system. I would remind the hon. member that this is a war-time budget and that the war has not yet finished, and that it is always very dangerous to change horses in midstream.

The Minister calls it a transition budget.

It is the same thing. The Minister has acknowledged that there are anomalies in his budget, but it is a war-time budget, and I think that any budget, war-time or not, would have to be a very perfect article to satisfy everyone. But when we hear hon. members talking about war-time taxes not being fair to consider the condition in Britain where they pay practically 100 per cent. war tax, I would like to say that I believe that the excess profits duty and the company tax has not hindered production at all. I say that the amount of money the Excess Profits Tax has produced has proved that the Minister was justified in introducing the excess profits duty. The company tax and the excess profits tax—and I say it with all sincerity— have in no way injured production in South Africa. That is evidenced if you look at the position of companies in Johannesburg, on the Reef generally, and the other industrial towns. They have not only kept their end up but they have doubled their production, and not only have they doubled their production, but they have doubled their income and in many cases doubled their premises, with the result that today most of them are trying to double or have doubled their capital and are putting forward different schedules and prospectuses as regards the doubling of their capital, and many of them are not only asking the ordinary price for their new share issue, but they are putting those shares on the market at a big premium and we find that they are being over-subscribed two or three times. I would ask you if that is a sign that these taxes interfere with industry? I say: “No, these taxes are looked upon by the loyal business man and by the loyal industrialist as fair war-time taxes. The ordinary business man feels that by paying these taxes he is only contributing his bit to the war effort. Whatever the Minister of Finance takes from us will never make up for the sacrifice that our young men are making for us up north. Not only are the companies doubling their capital, but we find there is a worse element creeping in, and that is that big mining and financial corporations who have picked the eyes out of the gold mines, now want to pick the eyes out of commerce and industry. I would like to say that the Minister will have to watch these companies to see that they do not become too powerful, otherwise they will try to dictate the budget instead of allowing the Minister to draw up the budget. The power they hold is evidenced by what happened in the case of one commodity. If we had given the opportunity to manufacture margarine to large and small companies, we would have had margarine today, but today we have to await the pleasure of one big company. The same thing will happen in other directions if we do not curb the influence of these big corporations. The next thing will be the formation of cartels. America had to condemn cartels; that is what we will have to do next. The big corporations are now buying up all the land they can get.

What about the holding companies?

I refer to all big financial companies. I would strongly urge that the Minister pay special attention to these companies and curb their power to such an extent that the individual who wants to work and who has the ability and desire to raise himself will have a chance. He does not have it today. He cannot go along and start a new industry as could be done before. It is denied to him; he has to work for these big companies and if he tries to start an industry of his own, they will simply not supply him with the necessary goods. He has to stay where he is. Let me say in conclusion, it is far worse for us to be dictated to by a trust than for the Minister to tell us how much taxation we should pay, especially in the form of war-time taxation.

I am very pleased that I have an opportunity of associating myself in this debate, especially as far as mining taxation is concerned, with hon. members who have made a plea to the Minister of Finance to come to the aid of the mines as far as taxation is concerned. I have previously made a similar plea in this House in that connection. I think the time has come when we must realise what our gold mining industry has done for South Africa and the part it has played in this war. Without the gold mining industry we would never have been able to prosecute the war as successfully as we have done. It has been said by hon. members of the Opposition, especially the hon. member for Swellendam (Mr. S. E. Warren) that the wine industry has played such a wonderful part in the economy of this country. I would like to have seen how far our troops would have gone if we had to rely on the wine industry. I do not think they would have reached the Limpopo. This type of statement only goes to show that some of our hon. friends do not realise what the gold mining industry is doing for South Africa. I make this appeal in all sincerity, as a mine worker and one who has a knowledge of the mines. I make the plea that the mines should be met in that direction, for the benefit of the workers. Actually the miner today is earning less than he earned before the war. Before the war he worked mostly on contract, and the miner was able to make a decent living. The majority of the miners today are daily paid, with the result that they are at a big disadvantage in comparison with their pre-war earnings. They are getting allowances, but these allowances do not equalise the amount they have actually lost in pay, and therefore I want to make this appeal that the position of those workers should be very seriously considered. This is a body of people from whom we have received a vast income. I would like to mention that by reduced taxation on the mines we will create more employment. We have heard the hon. member for Swellendam say that if the mines want to close down, they can do so, and in that case the State can take over. I make bold to say that that policy will definitely force us back to the period when the Opposition was in power in 1928-1932, when thousands of miners were walking the streets looking for work. At that time the mines were not prepared to adopt any policy which was in the interest of the mine worker. That is the policy to which hon. members of the Opposition are prepared to go back to, and I make bold to say that the Minister of Finance is not prepared to revert to that state of affairs. I happen to have been there, and I speak from experience. I know the conditions under which these men are working. I know what they are prepared to do to see the Government through. I wonder whether the hon. member for Swellendam has any idea how many miners will be thrown on to the street if the Government allowed the mines to close down. If hon. members who put up that plea can indicate to us in what way they are going to employ those people who will be thrown out of employment and how they are going to look after their families, we may listen to them, but they are putting up no alternative. With these few words, I thank you.

It is peculiar to sit in this House and to listen to all the pleas put up here by hon. members of the party opposite, the pleaders for the mines, while the farmers of that party are not in their seats. They evidently have no grievance; they are satisfied that the Minister of Finance should come before the House and ask them to consent to impose taxes on them in the manner he proposes here. Of course, we know that the gold mines are the pets of that party, and one can expect nothing else. I do not want to plead for the mines. I also listened to the representatives of the Labour Party who say that the mineworkers will derive benefit if the taxes on the mints are decreased. But can we take any notice of what those hon. members say? They say one thing here, but when it comes to voting they walk over the floor of the House like sheep. I want to put a few questions to the hon. Minister, purely from the point of view of the farmer. Last year we asked the hon. Minister to consider the advisability of applying a simplified form of income tax to the farming population. I think the hon. Minister knows that the farming population is not at home with figures, and there are very few of us who have any good idea of this system of taxation. I also want to ask him, where the Receiver of Revenue deals with the public, where they put questions to the public to receive the necessary information, that they should act a little more reasonably and should be a little more inclined to accept the word of the individual when he replies to those questions. To me it has become clear recently— I also received complaints about it—that one answers the questions put to one over and over, but the Receiver of Revenue is not prepared to accept those replies. Another matter to which I wish to draw the Minister’s attention is the rebate allowed on the nett income of the farmer, 30 per cent. for improvements on his ground and farm. That rebate affects the farmer very unjustly and unequally. The rich farmer or the old-established farmer who already has made all his improvements, who has lived on his farm for many years, is not affected at all because he erects no more improvements, but it affects young farmers; it affects the man who still has to improve his farm and who is not rich His total income is perhaps between £1,000 and £2,000 per annum, and we know that during the first years of a farmer’s life he puts everything he makes back into the ground. He invests everything in the ground, and now the hon. Minister, after the farmer has been forced to invest that money in the ground in order to improve it, says that only 30 per cent. of that total expenditure can be considered as a rebate. I think that is very unjust and unfair, and I wish to ask the Minister whether it is not possible to revise the system in that respect. Another matter is the tax on companies. There are also great inequalities there. Today we have two classes of companies which pay taxes. The one is a co-operative company and the other is a proprietary company. The inequality lies in this, that individuals gather to form a company to carry on a business, then they have an advantage over a co-operative company which is limited by the Co-operative Act so that it cannot pay compensation to its directors. The other company has this advantage that it can pay its directors a large proportion of its profits as fees, while the company formed under the Co-operative Act is not allowed to do that. The profits of the co-operative company are consequently all taxable. Another inequality is the following, that the Minister by the amendment he adopted last year forced co-operative companies to become closed companies. They can no longer give the services which they performed in the past. They are now turned into an instrument which must go out as a canvasser for its members. Last year we prophesied to the Minister that this would happen and we asked him to consider the matter. The result is that where companies existed they performed service to the public and to public institutions, but those services are now totally excluded. That was all caused by the tax which the Minister imposed on that portion of the turnover. Another little matter has already been brought to the Minister’s notice, but I should like to stress it again, namely the position of the farmer who at times is forced to sell his cattle and who then afterwards again has to buy cattle. He must now pay taxes on the incomes he derives from the sale of the cattle, and he gets into difficulties through the arrangements of the Minister. He is forced to sell all or portion of his cattle, and he must perhaps hold over the proceeds for six months or a year, and then it is taxable. It is then working capital on which he is being taxed. He receives no rebate. The following year he may possibly not have the income to purchase enough cattle. He can now write it off, but how much? He has practically no income to write off against it and that money is lost to him and he can never receive it back. Once again I wish to recommend very strongly to the Minister that he should revise the whole system of income tax as it is applied to farmers, and that he should put in its place a simplified system which the farmers can also understand. The farmer must be able to understand on what basis he is to pay income tax. As the system is at present not even the attorneys can understand it. They say that one day it is worked out on one basis and the other day on another basis. If we ask them to calculate our income tax they say that they can honestly not do so. Why must we have such a complicated system? Let us have a system which is simple. I am not against the income tax. I know the State and the Minister of Finance must have money, but make it possible for all of us to know what we must pay, so that we can be more or less prepared for what we have to pay. Today it is simply a case of going to the officials and we are in their hands. If he has calculated our income tax we must just take off our hats and pay. I wish to ask the Minister to investigate the whole system applied to the farmers and to try whether he cannot make it easier for us.

In making my humble contribution to this debate I do so on the same basis as the hon. member for Kensington (Mr. Gray), as the man in the street. I do not profess to be an economist like the hon. member for Gezina (Dr. Swanepoel) and I am very pleased I am not because when the hon. member for Gezina had finished his speech I did not know whether he was coming or going and I do not think he knew himself.

I have not finished yet.

He quoted from volumes of authorities. Just look at the books on his desk. I am sure he worked from the angle that in the post-war period there would be a depression. You know, this sort of thinking is psychological and has a psychological effect. It had a psychological effect in Germany for a long time, and that is the reason why we have been confronted with the catastrophe we have today. It is damaging to keep on thinking on these lines today, people get it in their blood. If you keep on telling a man he looks sick he will get sick.

You look sick.

We have done very well in this country. During five years of war we have done well and we should put our shoulders to the wheel during the post-war period and try to continue the advantageous position we have had for five years. Then we can talk about reducing taxation. The hon. member for George (Mr. Werth) who is a colleague of mine on the Public Accounts Committee, I know, is just as concerned as I am about the increase in public expenditure. It is always increasing. Take the demand for social services and the enquiry into the Public Service; this latter service alone has resulted in an increase of 1¾ million pounds. Unless we put our shoulders to the wheel and increase our income by a national effort, our income will never be increased. The Treasury after all is only a machine to tax something which is created, and if we do not create to the utmost it is inevitable that the scale of taxation has to be higher, but the more you create the less the incidence of taxation will be. My formula, as the man in the street, for decreasing taxation, is something on these lines: First of all we have to increase our efficiency, secondly by demanding less and working more this will result in decreased costs, and decreased costs means increased sales, and increased sales means increased national income, and increased national income means decreased taxation. I do not think we can get away from that. We have to face facts.

You are speaking about Utopia.

No, I am just talking about increasing our income per unit of the output, in terms of our manpower.

How will you increase it?

By working harder and getting everyone to be more efficient. That is the only way you will get an income whereby the Treasury as a taxing machine can get the necessary money to give us social services and at the same time decreased taxation. I will admit that the machine we have today as far as taxation is concerned is not altogether scientific. I understand that there are anomalies in our taxation system and I want to find any Minister of Finance who is so perfect that he can give us a taxation machine without creating any anomalies.

Especially in wartime.

And with no anomalies. The position is this, that the machine has to give the greatest good for the greatest number and that is what our wartime taxation has done.

It has not.

I will admit that there are anomalies. Even the Minister admitted that, that in so far as industry is concerned they are not in a position during wartime to import machinery, and he has met industry up to the point that he has allowed 15 per cent. rebate for obtaining machinery during the years 1945, 1946 and 1947. On the other hand it is admitted that the system of taxation is not scientific and he is negotiating at present with a committee set up by him in coöperation with commerce in order to go in for a revision of the taxation machinery. But do not forget this. Some people think that if there is going to be a revision in the system of taxation, in the end there will be a reduction of taxation. Today we are saying roughly 25 per cent. of our income in taxes. That is, revenue is 25 per cent. of the national income, and the figure will be much higher in future. Our income or revenue estimated for the coming year is £123,000.000. If you multiply that by four you get approximately £500,000,000, which means that on this basis, without an increase in the national income, we are paying 25 per cent. in taxation in relation to the national income. It is inevitable to my mind that unless we increase the national income considerably, the Treasury will have to tax on a heavier scale in future. Hon. members, especially those on the Opposition benches, said that any semblance of taxation, as far as the poorer people of this country are concerned, will be fought tooth and nail. The hon. member (Mr. Payne) who spoke from the Labour benches—I quite agree with him—said no matter how small or how big a man’s income is, he should be in the position, from his own point of view as a responsible citizen, to pay something as a contribution towards our national services. On the other hand, he must remember this, that the rate of taxation today is such that the heavier taxation falls on the high income groups. If you carry that a step forward you will have to be careful not to kill initiative altogether. But I pointed out in my speech on the Budget that in the ordinary way, if a man had an income of £40,000, he has to pay about £32,000 in taxes, and when you consider that the whole of the revenue of this country is derived from the taxable few — I do not know what the exact figure is, but it is less than one quarter of the population — it will be a very difficult matter to get more money to improve social services. What we should do today is to take off our coats and get down to the formula I have given the House. That is the only solution for reduced taxation and increased social services.

I want to associate myself with what the hon. member for Kroonstad (Mr. A. Steyn) pleaded for here, namely a revision of the taxation system in order that it may be improved. As the Minister of Finance knows, there are established farmers who have had their farms for many years and have had exemption from the expenses of those improvements which they required on their farms. On the other hand, everywhere in the country there are young farmers who are still busy developing their farms and who have to spend large sums of money on fencing, boreholes, windmills and sheds. The Minister must meet these people. If necessary a line can be drawn to divide bona fide farmers from cheque book farmers, as the Minister called them. Such a line can be drawn. In the Act of 1934, the Farmers’ Relief Act, there is a definition of a bona fide farmer, and I want to plead very earnestly with the Minister that he should realise that he is busy retarding production. On the one hand, the State by way of a subsidy encourages the combating of soil erosion, but the farmer can only deduct a certain percentage of those improvements for the purposes of income tax. I want to appeal to the Minister véry seriously to reconsider the decision of last year. Another matter which we pleaded for here last year and which I wish to mention again is that the amounts which bona fide farmers pay off from their mortgages should be exempted from income tax. A fortnight ago I had a case before me of a farmer who has a very large bond. His bond is £10.000. This year he had such an income that he could pay off an amount of £3,000. In the first place we now have the position that the Minister is going to take a large portion of that amount in the form of super tax and then he also has to pay taxes on the other portions of his income. I therefore want to ask the Minister to consider exempting from income tax the amounts which bona fide farmers pay off their mortgages. We mentioned enough instances last year, and do not have to repeat them this year. Then there is another little matter, the question of what members of Parliament can deduct from their salary for purposes of income tax. At the moment we can deduct nothing. The Minister must consider that some of our constituencies are very large. My constituency is 330 miles long and 250 miles wide. It takes me two or three weeks, and I have to travel between 1,500 and 2,000 miles to traverse my constituency in connection with my Parliamentary work. We have to do Parliamentary work, and we find that we cannot deduct the costs from our Parliamentary salaries. We receive those salaries as members of Parliament, but there are heavy expenses connected with our work. I wish to suggest to the Minister that he should permit us to deduct say £20 for every thousand square miles of our constituencies. That will help the person with a large constituency, because his costs are much higher than those of a member representing a smaller constituency. Take another case. We come to Cape Town. We have to pay for our lodging and we are away from our farming operations and professions, while the members who live in the Peninsula can attend to their professions and their work as usual. They do all their work as usual and have no further expenses. Their constituencies are small. They hold two or three meetings to report. Their costs are nothing in comparison with members who live far away. I wish to ask the Minister to meet members of Parliament on the lines I have suggested.

I would like to take my direction from the hon. member for Zululand (Mr. Morris) who, I feel, has brought to this debate a realistic tone. The revenue of any country depends on its national income, but the national income of any country depends on the ability of its people to exploit its natural resources, and to use the energies both mental and manual of its people and to direct these energies into the most profitable direction. Unlike the hon. member for Germiston (Mr. Payne) I consider that the system of private enterprise, the system known as capitalism, is the best means of developing the national income of any country. The hon. member professes to be a bedside socialist. I do not know how he is going to direct the energies of the people he wants to socialise and how he gives them driving force, but he talks socialism and is prepared to state in this House that the system followed by Russia has proved itself. I cannot agree in any way with that theory he puts forward. I do not think, although I know he has made a very enjoyable trip to Britain, that he has ever been to Russia. Then he might talk differently, if he had been there. The hon. member indicated to this House that he has always been able to earn a living by his hands. I would make bold to state that there are many people in this country who have to make a living by their brains, and they also play their part in the development of the country’s economy. This private enterprise which is so habitually condemned, particularly by the Labour Party, is something which has proved itself over a period of centuries. It has granted to the individual the right of ownership and with this ownership the right to security and stability, something which is necessary if you wish to use a man’s energies.

The Bronze Age also lasted for ages.

The hon. member for Hillbrow (Dr. Friedman) who is anxious to share in the debate has a great deal of theoretical knowledge, but his practical knowledge lacks much. I feel that on public health he is much more suited to raise a point, but this ownership gives the basis of security and stability. After that you have that drive to incentive, the profit motive so hated by the Labour Party. In addition the mere fact that a man has ownership means that he will waste his assets to the least degree possible, that he will use his reserves to the best advantage and the sum total of this basic private ownership will result in the greatest benefit to the national income. Under this beside socialism which the hon. member for Germiston refers to I cannot see how one can have a guarantee that there will not be a waste of economic capital and labour, and after all one of the big things in any economy is that there should be a minimum of labour wastage. We have only to look back, without little experience in this country, to see how, when you hand things over to a socialistic body or a government body there is much wastage. To mention just one incident of which I have a personal knowledge, I would refer to the wastage that took place in the maize industry about two years ago. Because there was a lack of ownership, because there was no definite ownership vested in any individual, maize was allowed to stand out in the rain and the elements and was ruined by the thousand ton, and eventually a loss of much money was involved.

How does the hon. member associate this with the motion before the House?

I associate it in this way that the revenue of a country depends upon the national income, and the national income depends on the way in which the people of the country treat their assets. If they waste their assets, the income and the revenue will drop and therefore I follow the line that we must have a system which will ensure the least wastage if we wish to have a sound economic system. I will not press that particular point, but I can assure you, and I think the House will realise, that instead of the ownership which the hon. member for Germiston condemns as being a bad thing, private ownership has done more towards looking after the resources of the country than any ownership which the Labour Party can show me. I would also like to refer to the speech of the hon. member for Swellendam (Mr. S. E. Warren). I think this House realises that he has an unfortunate habit of knowing everything about nothing. He has referred to the gold mines of the Transvaal as assets which we should just cut down and tax to the hilt, and then he stood up—and this is the part I like least of all—and praised to high heaven the great contribution of the K.W.V. and the wine industry to the national income of this country. Unlike the hon. member for Gardens (Dr. L. P. Bosman) I am not going to take him to task on the advantages of the consumption of liquor or otherwise but for him to make the ridiculous statement that the gold mining industry should be closed down and taxed until it closes down shows a narrow outlook which prevails in an area which has nothing to do with the large development of national income of this country. This mining industry, as the result of an objective analysis by professor Franckel of the national income of this country—he has indicated that of a national income of about £450,000,000, directly and indirectly it is responsible for at least £250,000,000. That is a conservative estimate. I should like to know whether if that amount is withdrawn from our national income the hon. member’s company, the K.W.V. (of which he is a director) would sell their brandy and their wine. I would like to know where our farming community would be without this great asset as a consuming asset, and also as a subsidy asset to help them to produce and direct their energy. What is worrying members from the Reef is that the gold mining industry reached a peak of production in 1944, that already the production of ore is diminishing, that it is being stated that six or seven mines are threatened with being closed down on account of increasing cost of production making it impossible to mine lower grade ore. The role these mines have filled is unquestioned. I saw an analysis of their labour sheets. They employ about 3,000 Europeans and 20,000 natives. Their contribution up to now to the national income has been in the neighbourhood of £15,000,000 a year, but if they shut down, and it looks possible, we shall be diminishing our national income. I feel that the House will have to pay greater attention to the position of the mining industry. I mentioned at the commencement that the exploitation of the country’s natural resources were one of the essentials of the development of its national income. Over a period of years, owing to the increased price of gold, we have felt that we could forget about the gold mining industry and allow things to drift. I hope we shall revise our policy in this direction. The mining industry, as I indicated, is faced with increasing costs. If we close down the mines we shall put out of employment a large number of Europeans and a large number of natives. From our point of view it is the one industry which has a ready market for its product, and we should devote a large amount of our energies to its future. We should nurse it and develop it. We should not allow it to stagnate and decay as it may do in the coming years unless we take a more objective view of it. One of the great factors today is the shortage of native labour. The mines could use 400,000 natives, and today they have under 300,000. This labour—which is cheap labour, is missing, and we consequently cannot exploit our mines to the fullest advantage. I do not know how we can overcome this. There have been drains on native mine labour by various secondary industries and by all sorts of sideshows. In addition to mines going out of production there are many new mines coming forward to continue the production of ore at the level we have had in the past. We have opportunities in the Free State of developing possible mines which could make up leeway in this direction. I think we should in every way encourage capital coming to this country to develop these mines, in regard to which experts tell us they will enable us to maintain the high level of production we have had in the past. Finally, I come to deal with another aspect of our economy which I feel may languish on account of insecurity and instability, and that is the commercial and economic outlook we are faced with in this country. It is not due to taxation; I will grant the Minister of Finance is not the biggest factor. Admittedly, as he has said himself, there is room for improvement in regard to taxation, but the improvement will come in the post-war period. But it is the lack of some definite and secure policy on the commercial and economic issues. I feel that whereas we preach that we are wholeheartedly supporting private enterprise we tackle the job in a very wishy-washy manner, and that behind the scenes there are all sorts of developments which are unsound and which only dissipate the energy of the people who have been responsible for the development of this country in the past. There is a feeling that behind this talk of private enterprise there are no solid facts to back it up. So many developments in the background belie the policy. We have all sorts of Government corporations. We have Government departments eliminating private enterprice and substituting a much more expensive form of economic development.

I am afraid the hon. member is getting right away from the question before the House.

The subject, I realise, is away from the factor of revenue, but it is all wrapped up with the economic development Of this country, and its national income.

The House is discussing the Minister’s taxation proposals.

Yes, I realise that. The trouble is if your national income dwindles your taxation system cannot be effective. I will not continue on that, but I would like to say unless we approach the future economic position of this country with courage and determination on the lines which have been tried in the last century and not on the lines now indicated by the hon. member for Germiston (Mr. Payne), this country’s revenue from taxation will dimmish, and our national income languish.

I want to associate myself with the hon. member for Calvinia (Mr. Luttig) who urged that the Minister should prepare a plan to give members of Parliament the chance to deduct certain expenses for taxation purpose. The main idea is that everyone gets exempted in respect of £400 for living expenses. That amount is not taxed, but the Minister must take into consideration that a member of Parliament has to keep two houses going for the greater part of the year. We who do not live in the Cape must maintain a house in the interior, and at the same time keep another house going here. There is a big difference between the position of a man who has to keep up two houses and the man who only runs one house. Apart from that members of Parliament do not get a cost of living allowance. Other members receive allowances. I do not want to advocate a cost of living allowance at this stage, but I am only pointing to the anomaly.

At 6.40 p.m. the business under consideration was interrupted by Mr. Speaker in accordance with the Sessional Order adopted on the 25th January, 1945, and Standing Order No. 26 (1), and the debate was adjourned; to be resumed on 30th April.